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9 Promotional Strategy McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. Agenda The Role of Promotion in Business Marketing Setting Objectives for a Promotional Plan Developing the Promotional Budget Developing and Implementing the Promotional Mix Measuring the Effectiveness of the Business Promotion Campaign Following Up and Making Necessary Changes 9-2 The Role of Promotion in Business Marketing Marketing Mix = Product, Price, Promotion, Place (Distribution) Business promotion = the use of seller-generated promotional tools to deliver messages to business markets. Promotion Mix Professional selling Advertising Public relations Sales promotion Direct marketing 9-3 The Role of Promotion in B2B Marketing Advertising, publicity (PR), sales promotion and direct marketing are communication methods used by marketers to inform, remind or persuade current and potential customers… In the business market, advertising, publicity, sales promotion and direct marketing pave the way for the sales call (professional selling). Integrated marketing communications (IMC) – the coordination of the promotional mix elements along with other marketing activities such that all communication with the firm’s customers is consistent Promotional campaign – a sequence of promotions reflecting a common theme and geared to specific objectives. 9-4 9-5 Steps in a Promotional Campaign 1. 2. 3. 4. 5. Setting objectives Developing a budget Developing and implementing the promotional mix Measuring the effectiveness of the campaign Following up and modifying the campaign 9-6 Step 1: Setting Objectives for a Promotional Plan Communication objectives • • • • • • • • • Building product awareness Inducing trial and/or retrial of new products Countering competitors’ offerings Building product-line acceptance Obtaining space with distributors Intensifying usage Aiding the sales staff Reviving a brand Confirming buyers’ purchase decisions 9-7 Setting Objectives for a Promotional Plan Sales objectives • Increasing market share • Stimulating short-term sales • Sustaining product preference Effective promotion helps sales; ineffective promotion can waste money and even damage company image. 9-8 Step 2: Developing the Promotional Budget Percentage of anticipated sales Affordable/Arbitrary (very common) Competitive parity/Market share Objective-and-task (very common) 9-9 9-5 9-10 Step 3: Developing and Implementing the Promotional Mix Business Advertising • Goals of Business Advertising To make current or potential customers aware of the marketer’s firm. To convey information about the characteristics of a particular product or service offered by the marketer’s firm. To ease the salesperson’s job. To reduce overall selling costs. 9-11 9-6 /e-mail /e-mail 9-12 Media Selection (media mix) Print Media Horizontal publications, e.g., Design Engineering, Purchasing Vertical publications, e.g., Chemical Industry News, Mechanical Contractor Professional publications, e.g., Architectural Digest, Dental Technology Industrial trade directories, e.g., Thomas Register of American Manufacturers General business publications, e.g., Fortune, Business Week 9-13 Media Selection (media mix) Broadcast Media Radio and TV are sometimes used where market is highly geographically concentrated and product is of interest to broad range of business users. • A roller bearing company in Ohio may use radio ads during morning commute in highly industrialized city to reach buying center influencers in local industries where roller bearings are used. • IBM, Hewlett-Packard, Xerox, or FedEx may use TV spot during “Dilbert,” which is watched by professionals from a wide range of industries, i.e., potential customers. Broadcast media would not be likely vehicle if products were only used by a few companies in target area (which is often the case). 9-14 Business Advertising Content A good ad often is similar to a sales call • Opener (headline) to catch interest • Body to convey information and benefits • Call for action to close Ad’s connection to customer’s buying and adoption process should be clear. A good ad: • • • • • • • Is memorable Is consistent with company’s image Interests the right target audience Is easy to read Provides evidence of customer value Motivates reader to want to learn more Provides easy way for reader to learn more 9-15 Advertising Agencies Advertising agencies work on advertising strategy and campaigns, prepare copy and layouts, study markets, select media, and carry out actual physical production of advertisement and its placement in selected media. Agencies do not always understand technology and particular buying process in business markets. Even when using advertising professionals, marketer must assure ad strategy and content is appropriate and effective. How can you do that? (continued) 9-16 Advertising Agencies When using an agency, marketer is responsible for: • Creating and measuring ad and campaign objectives. • Understanding target market’s adoption process. • Understanding how ad campaign fits into integrated promotion mix that moves potential buyer through each step in adoption process and supports continued customer satisfaction and repurchase. • Testing ads. 9-17 Advertising Agencies Many business marketers don’t formally test advertising effectiveness (as strange as that may seem!). Agencies are paid for their ad production costs, plus a percentage (~15%) of every media placement. If a marketer relies on the agency to recommend placements, there may be a conflict of interest. Some marketers are asking agencies to accept payment based on ad and campaign performance (pre- and posttesting). Agencies are resisting. 9-18 Developing and Implementing the Promotional Mix Business Publicity • Publicity can: Help build or add to company’s visibility or image. Introduce a new product, service, or improvement. Provide salespeople with easier entry into office of current or prospective customers. Can also be negative (continued) 9-19 Developing and Implementing the Promotional Mix Business Publicity • Good publicity doesn’t just happen; it is managed. PR department will create relationships with appropriate media representatives and provide them with newsworthy information presented from the company’s perspective. If all goes well, that is how it will appear. • Because media are not paid to present publicity, there is little control over how it is presented. Marketers tend to have more influence with media outlets they regularly use to advertise. 9-20 Developing and Implementing the Promotional Mix Business Publicity • Techniques for getting in the news: Press releases Exclusive features Press conferences Press kits 9-21 Business Publicity (Example) In a recent example of the lack of control over publicity, a university put out a news release concerning the student government’s new honor code. Acting on their own, the students created a set of honor standards and administration plan that are among the most rigorous in the nation. As a final step in the process, the faculty voted their support of the code. The news item was picked up by the region’s leading paper which ran the story under the bold headline: University Faculty Approves Cheating Plan At best, the headline is poorly worded. (continued) 9-22 Business Publicity (Example) Roger E. Axtell, a past Vice President of Marketing for the Parker Pen Company tells of one his first assignments with the company. He sent out a news release announcing a new company president and management team. The newspaper ran the item with the new management team’s pictures by the side of the article. Unfortunately, directly under the pictures the newspaper had placed an unrelated article with the headline: Local Men Arrested in Pig Theft Getting free publicity is nice, but it leaves you at mercy of poor placements, poor wording, or intentional negative spin. Use it with caution and try to build longterm relationships. 9-23 Developing and Implementing the Promotional Mix Business Sales Promotion - Trade Shows and Exhibits • • • • Deciding Whether to Participate Trade Show Budgeting Contests, Sweepstakes, and Games Advertising Specialties 9-24 Trade Shows and Exhibits 9-25 Trade Shows and Exhibits Trade shows are often large component of total business marketing promotion budget allocation (behind personal selling and, possibly, trade journal advertising). Trade shows (large and small, industry-specific and general) are regularly scheduled in cities all across the world. COMDEX, the U.S. computer industry trade show, brings together 2,200+ companies and 220,000 attendees. (continued) 9-26 Trade Shows and Exhibits Like all marketing expenditures, trade shows need to have measurable objectives and a budget. Expenses include: • • • • • • • • • • • • • Space rental Hotel Display booth Shipping (2-way) Set-up/dismantle (union rate) VCR/PC/internet/phone Travel Meals Entertainment Give-aways/Catalogs/Brochures to pass out to attendees Chairs, tables, carpet rental Pre-show promotion/advertising Post-show follow-up (continued) 9-27 Sales Promotion Advertising specialty items: • Desk clocks • Calendars • Pens • Calculator notepads • Posters • Desktop business card • Tape measures holders • Mugs • Travel alarm clocks If company name is on item that is handy to buying center influencers, is it effective as goodwill or as a reminder? 9-28 Winning Sales through Cooperative Promotion At Montana State University, Pepsi is out and Coke is in. In a competitive bid, Coca-Cola has won the five-year contract to be the exclusive soft drink supplier for the entire MSU campus. To win the contract, Coke offered the school a combination of cash payments and value through cooperative promotion. These promotions included: • $250,000/year payments plus a commission on sales • Cooperative marketing program including radio advertising • New soccer field scoreboard and ice machine • Coke cans across the region to carry MSU logo • Off-campus vending machines with MSU logo, plus commission on those sales • (From Marketing News, November 8, 1999, p. 9.) 9-29 Developing and Implementing the Promotional Mix Business Direct and Interactive Marketing • Business-to-business direct marketing is big business—approximately $1 trillion/year. • Types Direct mail Telemarketing e-mail/Internet 9-30 Step 4: Measuring the Effectiveness of the Business Promotion Campaign Pretesting and Posttesting Responses to Business Advertising Effectiveness can be hard to measure without investment in market research And how do you measure branding? 9-31 Step 5: Following up and Making Necessary Changes Set good objectives • • • • Quantifiable Specify target market Realistic/attainable Specify time frame Put measurement tools in place Provide quick feedback loop to relevant parties This is otherwise known as the “control” process. 9-32