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CHAPTER PRICING AND PROMOTION 23 OBJECTIVES Discuss how businesses and consumers make their buying decisions. Describe factors involved in establishing product prices and common pricing strategies. Discuss ways that companies try to control costs that can lead to higher prices. Discuss the purpose of promotion in meeting business and consumer needs. Identify the common promotional methods. Explain the parts of the selling process and how each is used to help customers make effective buying decisions. Identify important laws and regulations that apply to advertising and promotion. Advertising Purposes - pg 608 All forms of PAID promotional messages To inform and educate. To introduce product or business. To announce improvement or product change. To reinforce features and benefits. To increase frequency of use. To increase variety of uses. To convince people to enter a store. To develop a list of prospects. To make a brand, trademark, or slogan familiar. To improve the image of a company of product. To gain support for ideas or causes. Media Choices - pg 609 Publication - newspapers, magazines, prof. journals Mass media - radio, TV Outdoor - billboards, signs, Direct - sales letters, catalogs, telemarketing, computer databases Display - window, counter, aisle, trade show Internet - static banner, buttons, sponsored sites, email PLANNING AND MANAGING ADVERTISING The advertising budget companies allow an amount for advertising when they develop their overall company budget most businesses plan the advertising program for one year or less emergencies may arise that require a quick decision, but planning helps avoid budget misuse the amount a business spends on advertising depends more on the characteristics of the product and target market than on the competition PLANNING AND MANAGING ADVERTISING Timing of advertising advertising is more effective at sometimes than others companies spend more advertising dollars seasonally during the time the consumer is willing and able the buy the products or services advertised occasionally companies advertise to increase purchases at times customers do not traditionally consider buying the product a single advertisement may produce temporary results, but regular advertising is important in building a steady stream of customers businesses often spend their advertising over the entire year to keep their name and brand fresh in the customers mind Studying the wants of customers Buying motives- the reason why people buy. Examples: status, appetite, comfort, desire for bargains, recognition, ease of use. Presenting and demonstrating the product Customers are interested in what the product will do for them and how they can use it. Examples: “Why is this pair of shoes $168 and this one is $65?” Answering customer questions Objections- concerns or complaints expressed by the customer. Sales people should not be concerned by the questions, but should view them as an opportunity to better understand the customer’s needs and help the customer make the best decision. Closing the sale Sales people should continue to work with customers until it is clear that they do not want the product or until the sale is made. This may take several meetings before the decision is made. Follow-up The selling process is not complete just because a customer agrees to purchase the product. It’s not complete until the sales person makes sure that the customer is satisfied—successful selling. Check with customer to make sure order is correct May send thank-you note to customer after purchase TRUTH IN ADVERTISING AND SELLING False advertising Full disclosure Substantiation Cease and desist order Corrective advertising TRUTH IN ADVERTISING AND SELLING False advertising Defined by federal law as misleading or in any way that could influence the customers purchase or use of the product Full disclosure Providing all information necessary for consumers to make a informed decision Advertisers are required to use it TRUTH IN ADVERTISING AND SELLING Substantiation Must prove all claims they make about their products and services in promotions Cease and desist order Requires the company to stop using specific advertisements TRUTH IN ADVERTISING AND SELLING Corrective advertising New advertising designed to change the false Impression left by the misleading information Review Facts 1,3,7,9,10,13, 15 Discussion Ideas 3,5,6,7, 9, 10