Download The Role of Promotion - Buncombe County Schools

The Role of Promotion
• Promotion- any form of communication a
business or organization uses to inform,
persuade, or remind people about its
products and improve its public images.
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Product promotion
• used to convince potential customers to
buy products from it instead of from a
competitor.
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Explains major features and benefits of its products
Tells where those products are sold
Advertises sales on those products
Answers customer questions
Introduces new products
• Primary & Secondary
Primary product promotion
• Emphasis is on the product and its uses, and not
on a particular brand.
• Primary product promotion aims to stimulate
demand or consumer desire for an entire class of
goods and services.
• Competition is between the two different
industries.
• This type promotion useful when introducing a
new concept or a totally new product.
• Ex. Coke vs. Pepsi
Secondary product promotion
• Also known as selective product promotion.
Secondary product promotion is used to
stimulate the demand for a specific brand
of a product.
• Used to compete against other makers of
the same type of product.
• Ex. Coke Zero vs. Pepsi Max
Institutional Promotion
• used to create a favorable image for itself. Does not
directly sell a certain product. However, may ultimately
result in increased sales of a company’s products.
• There are three kinds of institutional
promotion:
– public service,
– public relations, and
– patronage.
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Institutional Promotion (cont)
• the company is the focus of the promotion instead of any
products it sells.
• concerned with the reputation of the store, with style
leadership, quality merchandise and services.
• Organizations promote concepts, ideas or philosophies
that they want consumers to associate with their brands.
• Ex. Scotties Tissues plants three trees for every one tree
used emphasizing how important the environment is to
the company.
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Institutional Promotion (cont)
• tends to be expensive because it doesn't
rely on immediate spending from the
consumer.
• also forces the organization to be
accountable for its promises. If the
organization fails to live up to the image it
has created in the promotions it will lose
brand loyalists to its competitors.
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Public service promotions
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inform customers about non-controversial issues that
are in the public’s best interest.
Many times, companies sponsor public-service
announcements on local television stations,
highlighting issues such as community drug prevention
or after-school participation in sports or arts programs.
Public-service promotions build goodwill for the
company, especially when they depict the company as a
friend of the community.
Ex .Insurance companies sometimes promote improved
health through changes in dietary and exercise habits.
Public relations promotions
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created to deal with issues that are in the public’s
interest but are also related to the company or its
products.
These promotional activities may be either proactive
(the business takes the initiative to promote itself) or
reactive (the business engages in the activities in
response to an external situation, such as a lawsuit).
They are used to influence company’s image directly,
such as improving a negative image or establishing a
positive one before negative feelings arise.
Ex. After the oil spill in the Gulf of Mexico, BP used their
own employees that lived in the Gulf area to reinforce
the fact that the area is safe, food is safe, and efforts to
clean up are successful.
Patronage
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Designed to get the customers coming
back to the company, therefore,
patronage promotion promotes a firm’s
prestige or the firm features.
Ex. PetSmart offers a Pet Perks loyalty
card.
Uses of institutional promotion
1. Change a particular attitude toward a firm or its
products:
• EX: In recent years, the tobacco industry has
come under fire for promoting its products, which
are associated with various form of disease. In an
effort to clean up this negative image, tobacco
companies such as Philip Morris have been
engaging in institutional promotions such as its
Quit Assist program and resources for helping
smokers kick the habit.
Uses of institutional promotion
(cont)
2. Inform customers of the company’s interest in
social or environmental issues:
• EX: Corporate giant IBM has a long-standing
commitment to environmental leadership in the
business world. The company has a written
environmental-affairs policy and participates in
many voluntary initiatives, such as membership
in the Wildlife Habitat Council.
Uses of institutional promotion
(cont)
3. Inform the public about the company’s
future:
• EX: When wireless communication
provider Verizon bought Alltel in 2009, the
company engaged in a promotional
campaign to let its customers and the
general public know about the change.
Uses of institutional promotion
(cont)
4. Inform customers of the company’s name
and its type of business :
• EX: During the rise in the popularity of the
Internet, many online travel agencies such
as Expedia and Travelocity were born, and
then they began promotions to let the
public know about their services.
Uses of institutional promotion
(cont)
5. Show the company’s commitment to
quality, technology, or research :
• EX: The world’s largest research-based
pharmaceutical company, Pfizer, uses
institutional promotion to demonstrate to
the public its commitment to using
research to help people live longer,
healthier, happier lives.
Uses of institutional promotion
(cont)
6. Enhance company morale and recruit new
employees :
• EX: Battelle, a global science and
technology corporation, holds many
recruiting events and initiatives all over
the country .
Uses of institutional promotion
(cont)
7. Build or reinforce a favorable company
image :
• EX: Coca-Cola’s $5 million donation of
bottled water and other beverages to
hurricane-ravaged New Orleans in 2005 is
one example of institutional promotion
meant to help build a highly favorable
company image.
Advantages of promotional
activities
• Promotion is an important part of the marketing
mix that communicates information about goods,
services, images, or ideas to customers.
• Promotion can accomplish a number of
objectives—building awareness, increasing
demand, differentiating a product from its
competitors, highlighting a product’s value, and
changing or reinforcing customer attitudes.
Several advantages of promotional
activities
• They contribute to economic growth and business
activity.
• They support the mass communication media.
• Companies benefit directly because these activities
create awareness of the company and its products.
• Customers benefit because these activities raise our
standard of living and make us better educated
customers who are able to make more intelligent
purchases.
• Create jobs due to the need to mass produce products
based on customer demand.
• Encourages consumers to purchase and use new and
improved products
Disadvantages of promotional
activities
• They can be deceptive, manipulative, and play on
consumers’ fears.
• They can be offensive and reinforce stereotypes.
• They have limited abilities.
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Product promotion does not add value to goods and services.
Institutional promotion can be costly and difficult to measure.
Promotion cannot make up for poor quality products
Promotion cannot substitute for well-trained sales staff/sales
person
– Promotion cannot achieve major success
REVIEW
• What are the 4 elements of the
PROMOTIONAL MIX?
• What are the +’s of each?
• What are the -’s of each?
Four Types of Promotion
• 1. Advertising - any paid form of nonpersonal
presentation and promotion of ideas, goods, or services
by an identified sponsor.
• Six Advantages of Advertising
– 1. A large number of people usually see the advertiser’s message
– 2. Costs per potential customer are usually lower than other
forms of promotion
– 3. Can choose the most appropriate media to reach target mkt
– 4. Can control the content of an advertisement
– 5. Ads are subject to repeat viewing
– Ads can “presale” products
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Advertising Disadvantages
• Four Disadvantages of Advertising
– 1. Cannot focus well on individual needs
– 2. Some forms of advertising can be too expensive for many
businesses
– 3. Sometimes advertising is wasteful and inefficient - message
may be spent on non-potential customers
– 4. Advertising must be brief
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Four Types of Promotion
• 2. Publicity & PR- placing newsworthy information about
a company, product, or person in the media. Can be used
to promote particular events and promote particular
products. The main purpose of publicity is to build an
image. Image - the way a business or organization is
defined in people’s minds.
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Publicity & PR + /• Advantages of Publicity
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Publicity is free; advertising is not
Can be used to create a positive image within the community
Viewed as being more credible or believable than advertising
Viewed as news, people more attention to publicity
• Disadvantages of Publicity
– Give up much of your control of your message
– Not all publicity is positive
– Lack of control by the business - bad stories can get printed
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Publicity and Public Relations
• Public Relations - any activity designed to create goodwill
toward a business.
• Benefits of PR
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Increasing sales
Increasing firm’s good reputation
Increasing customers reception of advertising messages
Spreading accurate information to the public
Conditioning customers to expect quality products from the
company
– Reducing the impact of problems
– Helping to obtain better treatment from government
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Audiences for PR
• Internal Audiences - groups within the organization
• Employee Relations - goal is to keep your employees
happy by using:
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Tuition reimbursement
Newsletters
Health and wellness programs
Opportunities for communications
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Audiences for PR
• External Audiences - groups outside the organization
• Customers - Satisfied customers = repeat business. Ways
to keep customers happy include:
– Provide special services and amenities such as gift-wrapping,
check cashing, free delivery, free parking, etc.
– Advisory boards - panels of consumers that make suggestions
about products and businesses
– Customer newsletters, annual reports
– Customer events - seminars, lunches, entertainment
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Audiences for PR
• Community - company sponsors activities that benefit the
civic, social, and cultural life of the community. Activities
can include:
– School partnerships - HP donating computers to the high school
– Sponsorship of community events
– Scholarships
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PR – News Release
• = a pre-written story about the company that is sent to
various media for publication. It usually contains
information about the company’s employees, stores,
operations, products, corporate philosophy, or participation
in an event or program. Can contain hard or soft news.
– Hard News - information that should be announced right away
because the public will want to know about it immediately
– Soft News - information that does not need to be announced
immediately because it will be of as much interest to the public later
as it is now
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Purposes of News Releases
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To introduce new products
To keep the business in the public eye
To position the business’s image
To support good employee relations
To create good community relations
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Getting Your News Release in the
Media
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Include a captioned photograph with the release
Meet media deadlines
Write an appropriate number of releases
Direct the release to a specific person
Advise the staff that you have sent out a release
Reread the release after setting it aside
Keep a copy of every release
Send a cover letter with the release
Send a thank-you note after the release is used
Avoid pressuring the editor
Avoid mentioning publicity or advertising
Avoid playing favorites
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Public Relations
• Press Kit - a folder containing articles, news releases,
feature stories, and photographs about a company,
product, or person. Press kits are given to the media to
assist them in reporting on the intended news item.
• Press Conference - a meeting in which media members
are invited by the business or organization to hear an
announcement about a newsworthy event.
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Four Types of Promotion
• 3. Sales Promotion - All marketing activities, other than
personal selling, advertising, and publicity, that are used
to stimulate consumer purchasing and sales
effectiveness.
• Objectives of Sales Promotion
– Increase sales
– Inform customers about new products
– Create a positive store or corporate image
• 3 Characteristics
– Short term activities
– Offers some type of incentive
– Can be successfully used in all channels of distribution
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Sales promotion can be either
consumer or trade oriented
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Trade Promotions - sales promotion activities designed to gain
manufacturers’, wholesalers’, and retailers’ support for a product. More
money is spent on promoting to businesses than to consumers.
1. Slotting allowances - a cash premium paid by the manufacture to a
retail chain for the costs involved in placing a new product on its
shelves.
2. Buying allowances - special price discount given by manufacturers to
wholesalers and retailers to encourage them to either buy a product or
buy a larger quantity.
3. Trade Shows and Conventions - designed to reach wholesalers
4. Sales incentives - awards given managers and employees who
successfully meet or exceed their company’s set sales quota.
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Sales promotion can be either
consumer or trade oriented
(cont)
• Consumer Sales Promotions - designed to encourage
customers to buy a product.
1. Licensing - Organizations, such as manufactures, movie makers,
sports teams, and celebrities, may license for a fee their logo,
trademark, trade characters, names and likenesses, or personal
endorsements to a business to be used in promoting the
business’s products.
2. Promotional tie-ins - involve sales promotional arrangements
between one or more retailers or manufacturers. They combine
their resources (advertising and sales promotional activities) to
do a promotion that creates additional sales for each partner.
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Consumer Sales Promotion (cont.)
– 3. Visual Merchandising and Displays – Visual Merchandising - the coordination of all
physical elements in a place of business so that it
projects the right image to its customers
– Displays - visual and artistic aspects of presenting a
product to a target group of customers.
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Consumer Sales Promotion (cont.)
4. Premium and Incentives - most popular and frequently used sales
promotion type
Premiums - low cost items given away free to consumers as a condition of
purchase.
Coupons - certificates given to customers entitling cash discounts
Factory Packs (in-packs)- free gifts placed in product packages
Traffic Builders - low cost premiums like key chains, pens
Coupon Plans - ongoing programs in exchange for labels, coupons, or
other tokens from one or more purchases
Incentives - higher-priced products given in contests or sweepstakes
5. Product Samples - free trial size of a product that is sent through the
mail, distributed door-to-door, orMEthrough
retail stores and trade shows38
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Sales Promotion + /• Advantages of Sales Promotions
– Unique and has special appeal to a potential customer
– Helps build customer loyalty
• Disadvantages of Sales Promotions
– Difficult to end without the customers becoming dissatisfied
– Store image and sales can suffer if the promotion is not properly
planned and managed
– Only designed to supplement other promotional efforts and
cannot make up for poor products
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Four Types of Promotion
• 4. Personal Selling - making an oral sales presentation to
one or more potential buyers. On a per contact basis,
personal selling is the most expensive form of promotion.
– Order-taking personnel - cashiers, counter clerks, and sales
associates, perform routine tasks.
– Order-getting personnel - professional salespeople, are more
involved in informing customers and helping them to buy. Usually
sell big ticket items like real estate, cars, appliances, and
industrial goods
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Promotional Mix
• = a combination of different types of promotion. A
business decides on a promotional mix that will be most
effective in persuading customers or other businesses to
purchase and support the business’s products.
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Promotional Mix
• Factors affecting the selection of a promotional
mix
– Good, Service, or Idea
• Type of product
• Product nature
• Stage of life cycle
– Product’s market
• Type of consumer
• Number of Consumers
• Geographical location
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Promotional Mix Factors (cont)
– Distribution System
– Product’s Company
• Historical perspective
• Available funds
• Size of sales force
– Competition
>>>> LAP HANDOUT - READ & HIGHLIGHT
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Three types of products (effects the
promotional mix)
• convenience,
• shopping, and
• specialty
Convenience products
• items that are purchased
frequently with minimal effort.
• EX: toothpaste, ballpoint pens,
and eggs—all routine buying
decisions.
• Because customers are
typically already familiar with
these products, personal
selling need not be
• included in the promotional
mix. Instead, advertising and
sales promotion are used to
promote them.
Shopping products
• goods and services such as automobiles, laptop
computers, and cell phone plans that are
purchased after a customer has made
comparisons of competing products.
• The customer checks prices, styles, colors, and
qualities of different products and “shops
around” for the best buy.
• Personal selling and national television
advertising are often used to promote shopping
products.
Specialty products
• have unique characteristics that are prized by
customers who make special efforts to obtain
them.
• Customers who purchase consumer specialty
products, for instance, spend a good deal of time
making their selections.
• Examples include expensivejewelry and rare
antiques.
• The same is also true of industrial specialty
goods such as complicated medical equipment
and sophisticated computer software.
• Businesses usually do extensive research before
purchasing such expensive technical products.
Specialty products (cont)
• Typically require more personal selling so that
customers can learn about product features as
well as how to operate the products.
• Also, in many cases, the image associated with a
specialty product determines the type of
promotional mix used.
• Marketers promoting designer handbags and
expensive sports cars, for instance, often
incorporate distinctive advertising, specialty
catalogs, attractive visual displays, and publicity
in their promotional mixes.
Stage of life cycle effects the
promotional mix
• Just as people develop and mature by
stages, so do goods and services.
• They go through life cycles by stages that
include being introduced to the market,
growing, maturing, and declining.
Introductory stage
• During a product’s introductory stage, the
new product is introduced to the market.
• Promotional efforts are designed to inform
customers about the existence of the new
product.
• Sales promotions and advertising are
commonly used at this stage of the
product’s life.
Growth stage
• Competing products appear during the
product’s growth stage.
• Promotional activities focus on pointing
out differences between products.
• Advertising is used extensively.
Maturity stage
• At this point in the product life cycle, the
product is well-established on the market.
• Promotion is used to remind customers of
the product’s benefits
Declining stage
• During a product’s declining stage, newer
products enter the market, taking the place of
existing ones.
• Companies may slow or stop production of the
product.
• The little money that is invested in promotional
activities is often aimed at maintaining a positive
image for the company.