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Chapter 13: Promotion — Introduction to Integrated Marketing Communications For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Chapter 13 Objectives When you finish this chapter, you should 1. Know the advantages and 6. Understand how new customerdisadvantages of the promotion initiated interactive communication methods a marketing manager can is different. use in strategy planning. 7. Know how typical promotion plans 2. Understand the integrated marketing are blended to get an extra push communications concept and why from middlemen and help from most firms use a blend of different customers in pulling products promotion methods. through the channel. 3. Understand the importance of 8. Understand how promotion blends promotion objectives. typically vary over the adoption curve and product life cycle. 4. Know how the communication process affects promotion planning. 9. Understand how to determine how much to spend on promotion efforts. 5. Understand how direct-response promotion is helping marketers 10. Understand the important new develop more targeted promotion terms. blends. 13-2 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Basic Promotion Methods Target Market Product Place Personal Selling Promotion Mass Selling Advertising Price Sales Promotion Publicity Exhibit 13-1 13-3 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Sales Promotion Activities Aimed at final consumers or users Contests Coupons Aisle displays Samples Trade shows Point-of-purchase materials Banners and streamers Trading stamps Sponsored events Aimed at middlemen Price deals Promotion allowances Sales contests Calendars Gifts Trade Shows Meetings Catalogs Merchandising aids Aimed at company’s own sales force Contests Bonuses Meetings Portfolios Displays Sales aids Training materials Exhibit 13-2 13-4 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Promotion and the Demand Curve Price D1 D2 0 Promotion efforts may be targeted to make demand for the firm’s products more inelastic and so more resistant to counter-moves by the competition. Quantity A. To be more inelastic 13-5 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Promotion and the Demand Curve Price D D 0 Quantity Promotion efforts may be targeted to increase the demand for the firm’s products. B. to the right 13-6 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Promotion and the Demand Curve Price D D 0 Quantity Promotion efforts may be targeted to both increase demand for the firm’s products and to make demand more inelastic C. Both to the right and more inelastic 13-7 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Promotion and the Demand Curve Price Price Price D D1 D D2 0 Quantity A. To be more elastic 13-8 D D 0 Quantity B. to the right 0 Quantity C. Both to the right and more elastic For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Promotion and the AIDA Model Promotion Objectives Informing Persuading Adoption Process AIDA Model Awareness Interest Evaluation Trial Decision Confirmation Attention Interest { } Desire } Action Reminding Exhibit 13-3 13-9 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill The Traditional Communication Model Source Encoding Message channel Decoding Receiver Noise Feedback Exhibit 13-4 13-10 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Message Interpretation Encoder The same message may be interpreted differently by the encoder and the decoder Common frame of reference Decoder 13-11 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Customer-Initiated Interactive Communication Receiver (Customer) Source’s Message Search Noise Select a topic Message channel Exhibit 13-5 13-12 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Push-Pull Strategies Producer’s Promotion Blend Exhibit 13-6 13-13 Wholesaler Promotion Push Promotion to Channel Members Wholesaler Promotion Push Retailer Promotion Push Business Customer Pull Promotion to Final Customers Promotion to Business Customers Personal Selling, Sales Promotion, Advertising, Publicity Final Consumer Pull For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill The Adoption Curve Innovators (3-5%) Percent Adoption 90 Early Adopters (10-15%) Early Majority (34%) Late Majority (34%) Laggards/ Nonadopters (5-16%) 50 20 5 0 Exhibit 13-7 13-14 Time For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Setting the Promotion Budget Percentage of Sales? ???? ???? ???? ???? ???? Match Competitors? Per Unit? Uncommitted Resources? Task Method! 13-15 For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Key Terms Promotion Personal Selling Mass Selling Advertising Publicity Sales Promotion Sales Managers Advertising Managers Public Relations Sales Promotion Managers Integrated Marketing Communications AIDA Model Communication Process Source 13-16 Receiver Noise Encoding Decoding Message Channel Pushing Pulling Adoption Curve Innovators Early Adopters Early Majority Late Majority Laggards Nonadopters Primary Demand Selective Demand Task Method For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill