Download CLASS 10 - CHAPTER 16, 17 and 18 promotion

What is being promoted?
• St. Joseph’s hospital (Minnesota) - tells the stories of three former patients
• Intriguing campaign that builds buzz (goes viral or spread by word-of-mouth)
1
Objectives
 To describe the nature of integrated marketing communications
 To examine the process of communication
 To understand the role and objectives of promotion
 To explore the elements of the promotion mix
 To examine the selection of promotion mix elements
 To understand word-of-mouth communication and how it affects promotion
 To understand product placement promotions
 To examine criticisms and defenses of promotion
Integrated Marketing
Communications
Coordination of promotion and other marketing efforts for maximum informational
and persuasive impact
 Fosters long-term relationships and efficient use of promotional resources
 Coordinating multiple marketing tools to produce this synergistic effect requires
a marketer to employ a broad perspective
 Integrated marketing communication is increasingly accepted:
 Consistent message to customers
 Coordinate/manage promotional efforts
 Synchronization of promotional elements
 Use more precisely targeted promotional tools
 Use of database marketing
 Protect consumer privacy
Promotion and the
Communication Process
 Communications – A sharing of meaning through the transmission of information
 Source – A person, group, or organization with a meaning it tries to share with a receiver
or an audience
 Receiver – The individual, group, or organization that decodes a coded message
 Coding Process (Encoding) – Converting meaning into a series of signs or symbols
Decoding the Message
 Communication Channel – The medium of transmission that carries coded message
from the source to the receiver
 Decoding Process – Converting signs or symbols into concepts and ideas
 Noise – Anything that reduces a communication’s clarity and accuracy
 Feedback – The receiver’s response to a decoded message
 Channel Capacity – The limit on the volume of information a communication channel can
handle effectively
Promotion
Communication to build and
maintain favorable relationships
by informing and persuading one
or more audiences to view an
organization positively and to
accept its products
 Promotion’s goal is to stimulate
product demand and build
customer relationships
 Most organizations expend a
large amount of resources on
promotion
?What are the promotional objectives behind this Ethos
Water advertisement?
Possible Objectives of Promotion
discuss and present
Create Awareness
Awareness is crucial to initiating the product adoption process
for new products
 For existing products, promotional efforts create increased
awareness of:
 Brands
 Product features
 Image-related issues
 Operational characteristics
Stimulate Demand
Primary Demand
 Demand for a product category rather than a specific
brand
Pioneer Promotion
 A way to stimulate primary demand
 Promotion that informs consumers about a new product
Selective Demand
 Demand for a specific brand
Encourage Product Trial
If customers is in the evaluation stage, marketers can use several
methods to encourage product trial in order to move them to product
adoption.
 Trial Techniques:
 Free samples
 Coupons
 Test drives
 Limited free-use offers
 Contests
 Games
Identify Prospects
Certain types of promotional efforts aim to identify customers who are
interested in the firm’s product and are likely potential buyers.
 Techniques Include:
 Television advertisement encouraging the viewer to visit the
company’s website to share information and receive something of
value
 Company should respond with phone calls, e-mail, or personal
contact by salesperson
Retain Loyal Customers
 The primary goal of marketing is to maintain long-term
customer relationships
 Keeping current customers is less costly than acquiring
new customers
 Retention techniques include:
 Frequent-user programs
 Special offers for existing customers
Customer Retention – continued…
 Listening to the customer
 Loyalty programs to reward most-valued customers
 e-Communications – e-newsletters, e-cards, or e-alerts
 Interactive promotions – Sweepstakes and contests
 Events – Seminars, workshops, etc.
 Client appreciation programs – Invitations to special events, etc.
Facilitate Reseller Support
Strong relationships with resellers are important to an
organization’s ability to maintain a sustainable competitive
advantage
 Various promotional methods help achieve this goal:
 Resellers view promotion as form of support
 Share promotional expense
 Special offers/buying allowances
Combat Competitive
Promotional Efforts
Promotional activities may aim to offset or lessen the effect of a
competitor’s promotional and marketing activities
 This type of promotional activity does not necessarily increase
sales or market share
 A combative promotional objective is used most often by firms in highly
competitive consumer markets
Reduce Sales Fluctuations
A business cannot operate at peak efficiency when sales fluctuate
widely
 Holidays
 Seasonal products
 Promotional activities are often designed to stimulate sales
during slumps
The Four Possible Elements of
a Promotional Mix
Promotion mix: A combination of promotional
methods used to promote a specific product
Advertising
 A paid nonpersonal communication about an organization and its
products transmitted to a target audience through mass media
 Advertising is changing as mass media consumption habits are changing
 The Internet and digital media aim at smaller, more targeted
audiences
 Advertising is highly flexible and can reach large or small audiences
depending on need
Advantages and Disadvantages
of Advertising
 Advantages:
 Cost-efficient when it reaches a vast number of people at a low cost per
person
 It lets the source repeat the message several times
 Visibility gained from advertising can enhance a firm’s image
 Disadvantages:
 Absolute dollar outlay is high
 Rarely provides rapid feedback
 Difficult to measure its effect on sales
 Less persuasive than personal selling
 Generally limited time exposure
Personal Selling
A paid personal communication that seeks to inform customers and
persuade them to purchase products in an exchange situation
 Advantages
• Has greater impact on consumers
• Provides immediate feedback
 Limitations
• Is expensive
• Is labor intensive and time consuming
Public Relations
A broad set of communication efforts used to create/maintain
favorable relationships between organization and stakeholders
 Publicity is a non-personal communication in a news-story
form about an organization, its products, or both
 Is transmitted through a mass medium at no charge
 Public relations should be viewed as an ongoing program
during crises and good times
Public Relations Tools






Publicity
Annual reports
Brochures
Event sponsorships
Sponsorship of socially responsible programs
Press releases/Conferences/Feature articles
Sales Promotion
Activities or materials that act as a direct inducement, offering added
value or incentive for the product to resellers, salespeople, or
customers:
 Free samples
 Games
 Rebates
 Sweepstakes
 Contests
 Premiums
 Coupons
Discussion Point
Sales Promotion
?What type of sales
promotion is
McDonald’s using in
this advertisement?
?What is the goal for
this type of
promotion?
Selecting Promotion Mix Elements – discuss and present
Resources,
Objectives,
Policies
Push and Pull
Channel
Policies
Characteristics
of the Target
Market
Promotional
Mix
Cost and
Availability of
Promotional
Methods
Characteristics
of the Product
Promotional Resources, Objectives, and Policies
 The size of an organization’s promotional budget affects the
number and intensity of promotional methods used
 A company’s objectives and policies influence the types of
promotions used
 Different objectives will require different promotional mixes
Characteristics of the Target Market
Crucial Elements of the Target Market:
 Size
 Often drives what promotional elements are chosen
 Small target markets often rely on personal selling
 Geographic distribution
 Dispersed customers often rely more heavily on advertising
 Demographic characteristics
 Age, income, education, etc. will affect consumers’ media consumption
patterns and are important considerations when developing the
promotion mix
Characteristics of the Product
 Business products concentrate on:
 Personal selling
 Sales promotion
 Consumer products concentrate on:
 Convenience goods = advertising
 Durables and expensive products = personal selling
 Both = public relations
 Product price is an important factor
 More risk (greater price) – more personal selling
Stage of the Product Life Cycle
The stage of a product’s life cycle affects decisions regarding the promotion mix
 Introduction
 Advertising plus personal selling and sales promotion to generate awareness
 Growth/Maturity
 Consumer goods = advertising
 Business advertising = personal selling and sales promotion
 Decline
 Reduction of all promotional activities
Distribution Intensity of the
Product
 Intensive Distribution
 Advertising, sales promotion
 Selective Distribution
 Promotion mixes vary
 Exclusive Distribution
 Personal selling
Costs and Availability of
Promotional Methods
National Advertising / Sales Promotion
 Have higher expense but low cost per individual
International Promotion
 Can be difficult because of lack of promotional channels
Personal selling
 Is dependent on recruiting and hiring qualified sales people
Push and Pull Channel Policies
Push Policy
 Promoting a product only to the next
institution down the marketing channel
Pull Policy
 Promoting a product directly to consumers
to develop strong consumer demand that
pulls products through the marketing
channel
Organizations may use both push and pull
policies at the same time
Growing Importance of
Word-of-Mouth Communications
Word-of-Mouth (WOM) Communication
 Personal, informal exchanges of communication that customers
share with one another about products, brands, and companies
 Most customers are likely to be influenced by friends and family
members when making purchases
 Effective WOM relies on marketers identifying opinion leaders
 Electronic WOM is becoming increasingly important
Growing Importance of Wordof-Mouth Communications
Buzz Marketing
 An attempt to incite publicity and public excitement surrounding a product
though a creative event
Viral Marketing
 A strategy to get consumers to share a marketer’s message, often through
email or online video, in a way that spreads dramatically and quickly
 How did 2Cellos became popular?
https://www.youtube.com/watch?v=Mx0xCI1jaUM
Mobile campaign – Coca Cola in Hong Kong
http://www.youtube.com/watch?v=pEDsERv-rFA
What is being promoted?
44
QR code - Quick Response
(http://www.wix.com/szdrav/sz#!contact)
• Specific matrix barcode, readable by dedicated QR barcode readers and
camera (smart) phones. The information encoded can be text, URL or
other data.
• Created by Toyota (Japan) in 1994 - used for tracking parts in vehicle
manufacturing
• QR codes now used in a much broader context, including both commercial
tracking applications and convenience-oriented applications aimed at
mobile phone users.
• QR codes may appear in magazines, on signs, buses, business cards, or on
just about any object about which users might need information.
• Users with a camera phone equipped with the correct reader application
can scan the image of the QR Code to display text, contact information,
connect to a wireless network, or open a web page in the phone's browser.
• http://www.youtube.com/watch?v=YoIUpTHUiIY&feature=related
45
QR code and Mobile marketing
•
•
•
•
Utilize mobile devices to communicate with the target consumer
Mobile campaign can focus on customers in a particular location
Marketer has an opportunity to interact with the customers
Traditional promotion is impersonal (distant) and addresses the masses
•
•
Tesco in South Korea
Lego in Germany
46
Product Placement
A form of advertising that strategically locates products or
product promotions within entertainment media to reach the
product’s target market
 In-program product placements have become a
successful method of reaching consumers, rather than
relying on commercial breaks
 Has become more important as more consumers
bypass advertisements through digital video
recorders, TiVo, and the Internet
Sponsorship and Product Placement
49
• https://www.youtube.com/watch?v
=8DnKOc6FISU
Sponsoring problematic people…
At least four Chinese brands are featured in
the recently released blockbuster
Transformers: Dark of the Moon. These include
t-shirts from Metersbonwe, Shuhua milk from
Inner Mongolia Yili Industrial Group, TCL's 3D
smart TVs and the new notebook computer
from Lenovo.
Asian-American actor Ken Jeong is seen
holding a carton of milk in an elevator as he
delivers the line, "I'm not talking to you until I
finish my Shuhua milk."
Criticisms and Defenses of Promotion
Is promotion deceptive?
 Some are, but not all promotion should be condemned
 Laws, government regulation, and industry self-regulation have helped decrease deceptive promotion
Does promotion increase prices?
 If promotion is working to stimulate demand, producing and marketing larger quantities can actually help
reduce prices
Does promotion create needs?
 Marketing does not create needs, but makes consumers aware of needs they already have
Does promotion encourage materialism?
 Marketers assert that values are instilled at home and promotion does not change people into materialistic
consumers
Does promotion help customers without costing too much?
 Promotions inform customers about a product’s uses, features, advantages, prices, or purchase locations
Should potentially harmful products be promoted?
 Defenders argue that, as long as it is legal to sell a product, promoting it should also be allowed
Objectives
 To describe the nature and types of advertising
 To explore the major steps in developing an advertising
campaign
 To identify who is responsible for developing advertising
campaigns
 To examine the tools used in public relations
 To analyze how public relations is used and evaluated
Advertising
Both large organizations and small companies use conventional
and online promotional efforts like advertising to:




Change their corporate image
Build brand equity
Launch new products
Promote current brands
Types of Advertising
Institutional advertising promotes organizational images, ideas and
political issues
 Can be used to create or maintain an organizational image
 May aim to create a more favorable view of the organization in the eyes of
noncustomer groups
Advocacy advertising is advertising that promotes a company’s position
on a public issue
 May be used to promote socially approved behavior such as recycling or
moderation in consuming alcoholic beverages
Types of Advertising
Product advertising promotes the uses, features and benefits of
products
 Two types of product advertising:
 Pioneer advertising – tries to stimulate demand for a product
category rather than a specific brand by informing potential buyers
about the product
 Used most often for products before they hit the market
 Competitive advertising – tries to stimulate demand for a specific
brand by promoting its features, uses and advantages relative to
competing brands
Types of Advertising
Three types of competitive advertising:
 Comparative advertising – compares the sponsored brand with one or
more identified brands on the basis of one or more product characteristics
 Reminder advertising – used to remind consumers about an established
brand’s uses, characteristics and benefits
 Reinforcement advertising – assures users they chose the right brand
and tells them how to get the most satisfaction from it
Promotional Elements - Advertising
Product advertising (focus on selling a good or service)
Pioneering- inform
Comparative– persuade
Reminder
Institutional advertising (builds image for an organization)
Idea advertising
Idea / product advertising
Developing an Advertising Campaign –
discuss and present
An advertising campaign is the creation and execution of
a series of advertisements to communicate with a particular
target audience
The eight
steps in
creating an
advertising
campaign
Step 1: Target Audience
The target audience is the group of people at whom
advertisements are aimed
 This may include everyone in the firm’s target market or only a
portion of the target market
 Identifying and analyzing the target audience are critical
processes as the information yielded helps determine other
steps in developing the campaign
 The more an advertiser knows about the target audience, the
more likely the firm is to develop an effective advertising
campaign
Target Audience
Banana Republic targets an older, more affluent target
audience than the Gap
Step 2: Advertising Objectives
Advertising objectives guide campaign development and should be
defined carefully
 Objectives should be stated clearly, precisely and in measureable terms
 Benchmarks provide measurability
 Objectives can be defined on the basis of:
 Sales – increasing dollar sales or unit sales, increasing sales by a percentage
or increasing market share
 Communication – increase product or brand awareness, make consumers’
attitudes more favorable, heighten consumers knowledge of product features
or create awareness
Step 3: Advertising Platform
Advertising platforms are basic issues or selling points to
be included in an advertising campaign:
 The platform should consist of issues important to customers
 A single advertisement in an advertising campaign may contain
one or several issues from the platform
 Because the platform is a base on which to build the advertising
message, marketers should analyze this stage carefully
Step 4: Advertising Appropriation (funding)
The advertising appropriation is the advertising budget
for a specific time period
 Many factors affect a firm’s decision about how much to
appropriate for advertising
 Geographic size of the market
 Distribution of buyers within the market
 The type of product
 The firm’s sales volume relative to competitors’ sales volumes
 Business products have small appropriations relative to sales,
while consumer convenience items have large appropriations
relative to sales
Step 4: Advertising Appropriation
Four approaches to determining advertising appropriation:
 Objective-and-task approach – budgeting for an advertising campaign
by first determining its objectives and then calculating the cost of all the
tasks needed to attain them
 Percent-of-sales approach – budgeting for an advertising campaign by
multiplying the firm’s past and expected sales by a standard percentage
 Competition-matching approach – determining an advertising budget by
trying to match competitors’ advertising outlays
 Arbitrary approach – budgeting for an advertising campaign as specified
by a high-level executive in the firm
Step 5: Media Plan
A media plan specifies the media
vehicles to be used and the
schedule for running
advertisements
 Determines how many people in
the target audience will be exposed
to the message and how the
message will effect them
 This is a complex task requiring
analysis of the target audience
Step 5: Media Plan
 The primary goal of the media plan is to reach the largest number of
people with the advertising budget
 The secondary goal is to achieve the appropriate message reach and
frequency for the target audience while staying within budget
 Reach refers to the percentage of consumers in the target audience
actually exposed to a particular advertisement in a stated period
 Frequency is the number of times these targeted consumers are
exposed to the advertisement
Step 5: Media Plan
Media planners must decide on which kinds of media to use:
 Radio, TV, newspapers, digital or online advertising, magazines, direct mail,
outdoor displays or signs on mass transit vehicles
 They take many factors into account
 Analyze location and demographic characteristics of consumers in the target
audience
 Consider the sizes and types of audiences that specific media reach
 Content of the message may affect media choice
Advantages and Disadvantages
of Major Media Classes
Advantages and Disadvantages
of Major Media Classes
Step 5: Media Plan
 Cost is a troublesome consideration because there is no
accurate way to compare the costs of one medium over another
 Planners try to obtain the best coverage possible for each dollar
spent
 Cost comparison indicator is a means of comparing the costs of
advertising vehicles in a specific medium in relation to the number
of people reached
 Example: the cost per thousand impressions (CPM) is the cost
comparison indicator for magazines; showing the cost of exposing
1,000 people to one advertisement
Step 5: Media Plan
 Digital marketing is creating a dramatic shift for advertising
agencies
 Digital marketing is not reduced to one medium, but can include
platforms such as
 E-books
 iPads
 Geotargeting
 Mobile apps
 Agencies that embrace the new advertising media are facing
challenges in adapting but also finding increased profitability
Step 5: Media Plan
Like media selection decisions, media scheduling decisions are affected by numerous factors, such
as:
 Target audience characteristics
 Product attributes
 Product seasonality
 Customer media behavior
 Size of the advertising budget
There are three general types of media schedules:
 Continuous – advertising runs at a constant level with little variation throughout the campaign period
 Flighting – advertisements run for set periods of time, alternating with periods in which no ads run
 Pulsing
 Combines continuous and flighting schedule; during the entire campaign, a portion of advertising
runs continuously
 During specific time periods, additional advertising is used to intensify the level of communication
with the target audience
Step 6: Advertising Message
The basic content and form of an advertising message are a function
of several factors:





Product features, uses and benefits
The intensity of the advertising
Characteristics of people in the target audience
The advertising campaign’s objectives and platform
Choice of media
 Regional issues are versions of a magazine that differ across geographic
regions
Step 6: Advertising Message
Copy is the verbal portion of advertisements
 May include some or all of the following

Headlines
 Critical as people often only read headlines

Subheadlines
 Links the headline to the body copy

Body copy
 Usually consists of several paragraphs

Signature
 Identifies the advertisement’s sponsor and may
include a trademark, logo, name and address
Step 6: Advertising Message
Radio copy should be informal and
conversational to attract listeners’ attention
 Highly perishable, should consist of short, familiar
terms
In television copy, the audio material must not
overpower the visual material, and vice versa
 A television message should make optimal use of
its visual portion which can be effective for product
use, applications and demonstrations
 Storyboard is a blueprint that combines copy and
visual material to show the sequence of major
scenes in a commercial
Step 6: Advertising Message
Artwork is an advertisement’s illustrations and
layout
 Illustrations are photos, drawings, graphs, charts
and tables used to spark audience interest in an
advertisement
 Communicates an idea quickly or conveys ideas
difficult to express
 Important because consumers tend to better recall
the visual rather than the verbal portions
 Layout is the physical arrangement of an
advertisement’s illustration and copy
Artwork
This Jaguar ad contains all the components of
a print ad, including a headline, signature and
illustration
Promotional Elements - Advertising
Developing advertising program
Designing the advertisement - inform and persuade
• Advertising appeal: humor, fear, sex
• http://www.adweek.com/topic/veryfunnyadscom
1
2
3
Humor in Advertisements:
• http://www.youtube.com/watch?v=BQv0VwwVwKU
• http://www.youtube.com/watch?v=M4SkoJy3D0M
• http://www.youtube.com/watch?v=QKfGeLoJKg0
One company – 3 appeals
Step 7: Executing
Execution of an advertising campaign requires
extensive planning and coordination because
many tasks must be completed on time with
several people and firms involved
 Some possible contributors to the campaign are
production companies, research organizations,
media firms, printers and commercial artists
 Implementation requires detailed schedules to
ensure various phases are done on time
Step 8: Evaluating
A variety of ways exist to test effectiveness including
 Measuring achievement of advertising objectives
 Assessing effectiveness of copy, illustrations or layouts
 Evaluating the effectiveness of certain media
Step 8: Evaluating
Advertising can be evaluated before, during and after the
campaign
 Pretest – evaluation of advertisements performed before a campaign
begins
 Consumer jury – a panel of a product’s existing or potential buyers
who pretest ads
 To measure effectiveness during a campaign, marketers use
inquiries or responses
 Posttest – evaluation of advertising effectiveness after the campaign
 Objectives often determine what kind of posttest is appropriate
Step 8: Evaluating
Posttest methods include
 Recognition test
 Respondents are shown the actual ad and asked if they recognize it
 Unaided recall test
 Respondents are asked to identify advertisements they have seen
recently but not given recall clues
 Aided recall test
 Asks respondents to identify recent ads and provides clues to jog
their memories
Who Develops the Advertising
Campaign?
An advertising campaign may be handled by:
 An individual or a few people within a firm
 Small firms depend heavily on local media
 A firm’s own advertising department
 May obtain services of independent research
organizations or may hire freelance specialists for
some projects
 An advertising agency
 May be advantageous because an agency provides
highly skilled, objective specialists with broad
experience at low to moderate costs to the firm
Public Relations
Public relations are communication efforts used to create and
maintain favorable relations between an organization and its
stakeholders
 Can be directed at either internal or external stakeholders
 Public relations can be used to promote people, places, ideas,
activities and even countries
 Often used by nonprofit organizations
 Public relations focus on enhancing the image of the total
organization
Public Relations Tools
 Companies use a variety of tools to convey messages and
create images
 Public relations tools include
 Written materials such as brochures, newsletters and annual
reports
 Corporate identity materials such as business cards and signs
 Speeches
 Event sponsorships
 Special events
Public Relations Tools
Publicity - a news story type of communication about an organization
and/or its products transmitted through a mass medium at no charge
 Publicity-based public relations tools include:
 News release – a short piece of copy publicizing an event or product
 Feature article – a manuscript of up to 3.000 words prepared for a
specific publication
 Captioned photograph – a photo with a brief description of its contents
 Press conference – a meeting used to announce major news events
Reasons for Publicity Releases
Evaluating Public Relations
 Environmental monitoring identifies changes in public opinion
affecting an organization
 A public relations audit is used to assess an organization’s public
image or to evaluate the effect of a specific public relations program
 A communications audit may include a content analysis of
messages, a readability study or a readership survey
 Social audit is used when an organization wants to measure the
extent to which stakeholders view it as being socially responsible
Unfavorable Public Relations
 Companies may have to deal with unexpected and unfavorable
publicity resulting from:
 An unsafe product
 An accident resulting from product use
 Controversial actions of employees
 Or some other negative event or situation
 Negative events that generate public relations can wipe out a
company’s favorable image and destroy positive customer attitudes
 How an organization deals with unfavorable actions and outcomes
can have a significant impact on firm valuation
Unfavorable Public Relations
 First and foremost, the organization should try to prevent negative
incidents and events through:
 Safety programs, inspections, training and effective quality control
procedures
 Consistent brand messages and images throughout all
communication at times of crisis helps strengthen the brand
 Plans and policies should be in place before a crisis occurs
 In most cases, organizations should expedite news coverage of
negative events rather than try to discourage or block them
Discussion Point
Toyota Uses Advertising to Restore Trust
 In 2009 and 2010, Toyota issued a series of recalls because of safety
problems with accelerators, brakes and power steering
 Now Toyota is fighting to regain its dominance by tailoring ads to target
specific parts of the population
? How is Toyota using advertising to overcome negative publicity associated with a
product quality issue?
? Why did Toyota have to pull advertising for its cars’ dependability, safety and
reliability during a time when it was getting so much public attention for safety
recalls related to sudden acceleration?
Objectives
 To explain what sales promotion activities are and how
they are used
 To explore specific consumer sales promotion methods
 To explore trade sales promotion methods
 To understand the major purposes of personal selling
 To describe the basic steps in the personal selling
process
 To identify the types of sales force personnel
 To recognize new types of personal selling
Sales Promotion
An activity and/or material that acts as an inducement to resellers or
salespeople to sell a product or consumers to buy it
 Marketers must consider multiple factors when determining the best
consumer sales promotion methods
 Product characteristics
 Target market characteristics
Sales Promotion Is Popular
Sales promotion is more heavily used than ever; at the expense of
advertising
 Heightened customer concerns about value
 Retailers have considerable power in the supply chain and are
demanding greater promotional efforts
 Declines in brand loyalty mean sales promotions are more
effective
 The stronger emphasis placed on improving short-term results
calls for greater use of sales promotion methods
Consumer Sales Promotion
Methods
Sales promotion techniques that encourage consumers to patronize specific stores
or try particular products
Coupons
 Written price reductions used to encourage consumers to buy a specific product
 Is the most widely-used consumer sales promotion technique
 Effective for building brand awareness
 Reward present users
 Win back former users
 Encourage purchases in large quantities
 Are traceable to target market
 Electronic coupons are low-cost, have greater targeting ability and have data-gathering
capabilities
Coupon Disadvantages
 Fraud and misredemption
 Many customers will not buy without a coupon
 Brand loyalty diminished
 Some customers will only redeem coupons for products they
normally buy
Other Consumer Promotional
Methods
Money-Off
 Promotions that allow buyers to pay less than the regular price to
encourage purchase
Money Refunds
 Promotion techniques that offer consumers a specified amount of
money when they mail in a proof of purchase, usually for multiple
product purchases
Rebates
 Promotion techniques in which a consumer receives a specified
amount of money for making a single product purchase
Other Consumer Promotional
Methods
Frequent-User Incentives
 Many firms develop incentive programs to reward customers who
engage in repeat/frequent purchases
Point-of-Purchase Materials (POP)
 Signs, window displays, counter pieces, etc. designed to attract
attention and inform customers
Demonstrations
 Sales promotion methods a manufacturer uses temporarily to
encourage trial use and purchase of a product or to show how a
product works
Other Consumer Promotional
Methods
Free Samples
 Samples of a product given out to encourage trial or purchase
Premiums
 Items offered free or at a minimal cost as a bonus for purchasing a
product
Consumer Contests
 Sales promotion methods in which individuals compete for prizes
based on their analytical or creative skills
Other Consumer Promotional
Methods
Consumer Games
 Sales promotion methods in which individuals compete
for prizes based primarily on chance
Consumer Sweepstakes
 A sales promotion in which entrants submit their names
for inclusion in a drawing for prizes
Trade Sales Promotion
Methods
Trade Sales Promotion Methods
 Attempt to persuade wholesalers and retailers to carry
and aggressively market a producer’s product




Counter the effect of lower-priced store brands
Pass along a discount to a price-sensitive market segment
Boost brand exposure among target customers
Provide incentives to move excess inventory
Trade Allowances
Buying Allowance
 A temporary price reduction to resellers for purchasing specific quantities of a product
Buy-Back Allowance
 A sum of money given to a reseller for each unit bought after an initial promotion deal is
over
Scan-Back Allowance
 A manufacturer’s reward to retailers based on the number of pieces scanned
Merchandise Allowance
 A manufacturer’s agreement to pay resellers certain amounts of money for providing
special promotional efforts, such as setting up and maintaining a display
Cooperative Advertising and
Dealer Listings
Cooperative Advertising
 An arrangement in which a manufacturer agrees to pay a certain
amount of a retailer’s media costs for advertising the manufacturer’s
products
Dealer Listings
 Advertisements promoting a product and identifying the names of
retailers that sell the product
Free Merchandise and Gifts
Free Merchandise
 A manufacturer’s reward given to resellers that purchase a
stated quantity of products
Dealer Loader
 A gift given to a retailer that purchases a specified quantity of
merchandise
 Often used to coerce special display efforts
Premium (Push) Money
 Additional compensation to salespeople offered by the
manufacturer as an incentive to push a line of goods
 Is a good method when personal selling is important to the
marketing effort
Sales Contests
 A sales promotion method used to motivate distributors,
retailers, and sales personnel through recognition of
outstanding achievement
 Positive effects may be temporary
 Prizes are usually expensive
Personal Selling
Paid personal communication that attempts to informs customers and
persuades them to buy products in an exchange situation
 Millions of people earn their living through personal selling
 Flexible hours
 Potential for high earnings
 High degree of job satisfaction
 New technologies make personal selling faster, more efficient and
easier
Advantages and Disadvantages
of Personal Selling
Advantages
 Provides marketers the greatest freedom to adjust a
message to satisfy customers
 The most precise of all promotional methods; enables
marketers to focus on the most promising sales prospects
Disadvantage
 The most expensive element in the promotion mix
General Steps in the Personal Selling Process –
discuss and present
Promotional Elements – Personal Selling
Process
•
•
•
Lead – name of possible customer
Prospect – customer who needs the product
Qualified prospect – customer who can afford
the product and is a decision maker
•
It is common for several meeting to occur before
business matters are discussed in Asia and
Middle East
•
Stimulus-response format (suggestive selling –
“would you like fries with that?”)
Formula selling format – standard message to
every prospect
Need satisfaction format – probing and listening
to identify needs of customers
Handling objections:
•
“Price is high because…
•
“Let‘s discuss that later…
•
“You are correct but the benefits are…
•
“You are correct.”
•
“That is not correct.”
•
•
•
Prospecting
Developing a database of potential customers
 Names can be found in a variety of sources internal
and external to the firm
 Company sales records
 Trade shows
 Databases
 Trade association directories
 Traditional and online advertisements can generate
leads on interested prospects
 Customer referrals from current customers are a key
source
Preapproach
Before contacting them, the salesperson
analyzes information about the prospect’s needs
 Identify key decision makers
 Review account histories and problems
 Contact other clients for information
 Assess credit histories and problems
 Prepare sales presentations
 Identify product needs
 Obtain relevant literature
Approach
The manner in which a salesperson contacts a potential
customer
 Is a critical step because the first impression of the
salesperson may be long-lasting
 The salesperson must create a relationship with the
prospect, not just sell products
 Typical approaches:
 Referrals
 Cold Canvassing
 Repeat Contact
Making the Presentation
 The salesperson must attract and hold the prospect’s attention,
stimulate interest in and spark a desire for the product
 Adapt the presentation to the needs of the prospect
 Use influencing tactics matched to prospects
 Repeat what you hear
 Stay relaxed
 If you communicate a lot by e-mail, keep your messages short
 Pay attention to non-verbal behavior
 Always take time to follow up with reflection and clarification
Overcoming Objections
 Effective salespeople anticipate and counter
objections before the prospect raises them
 Be careful with this technique – you do not want
to raise objections the prospect did not have
 The safest approach is to be prepared and handle
objections as they arise
Closing the Sale
The stage in the personal selling process when the
salesperson asks the prospect to buy the product
 The salesperson may attempt a “trial close” by asking
questions that assume the prospect will buy
 Attempt to close at several points during the
presentation in case the prospect is ready to buy
Types of Salespeople
Order Getters
 Salespeople who sell to new customers and increase sales to current customers
 Current-Customer Sales
 New-Business Sales
Order Takers
 Salespeople who primarily seek repeat sales
 Inside Order Takers work in sales offices
 Field Order Takers travel to customers
Support Personnel
 Sales staff members who facilitate selling but usually are not involved solely with making sales
 Missionary salespeople, usually employed by a manufacturer, assist the producer’s customers
in selling to their own customers
 Trade salespeople involved mainly in helping a producer’s customers promote a product
 Technical salespeople give technical assistance to a firm’s current customers
Promotional Elements – Personal Selling
How do order-getters spend their time?
On-site contact – average cost $350
Outbound telemarketing is popular to decrease costs
Selected Types of Selling
Team Selling
 Using a team of experts from all functional
areas of a firm, led by a salesperson, to
conduct the personal selling process
Relationship Selling
 Building of mutually beneficial long-term
associations with a customer through regular
communications over prolonged periods of
time