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PROMOTION 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 image. – There are four basic types: • • • • Advertising Publicity Sales Promotion Personal Selling http://www.youtube.com/watch?v=ClL7FYUCS58 (The Process) Two Types of Promotion http://education-portal.com/academy/lesson/types-of-advertising-institutional-and product-advertising.html#lesson (Two Types: Product & Institutional) • Product Promotion – To convince potential customers to buy products from it instead of from a competitor • • • • • explains major features and benefits of its products, tells where those products are sold, advertises sales on those products, answers customer questions, and introduces new products. http://www.youtube.com/watch?v=_KeQxn2UNAk (Product Promotion) Two Types of promotion (cont.) • Institutional Promotion – Businesses use to create a favorable image for itself (especially in relation to competitors). • Does not directly sell a certain product, • but creates a favorable image, • thus ultimately resulting in increased sales of a company’s products. http://www.youtube.com/watch?v=rubcXpSV9pI (Nike: Institutional Video Example) ADVERTISING • Is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. – Distinguished from other forms of promotion by three features: 1. The time or space devoted to it is paid for. 2. It uses a set format to carry the message rather than personal, one-on one selling. 3. It identifies the sponsor of the message. Advertising Tid Bit • Nationally businesses spend more than 135 billion on various types of advertising. Six (6) Advantages of Advertising 1. A large number of people usually see the advertiser’s message. 2. Advertising costs per potential customer are usually lower than other forms of promotion. (billboards, newspaper, radio, TV, etc). 3. Businesses can choose the appropriate media. (billboards, newspaper, radio, TV, ect). 6 Advantages of Advertising (cont.) 4. A business can control the content of an advertisement & adapt. 5. Advertisements are subject to repeat viewing. (More X message more chance buy) 6. Advertisements can “presell” products. (influ. before buy) Disadvantages to Advertising 1. Advertising cannot focus well on individual needs because the message is the same for all customers. 2. Some forms of advertising such as television, can be too expensive for many businesses. Disadvantages to Advertising (cont.) 3. In certain respects, advertising is wasteful and inefficient (Many who read are not actually potential customers). 4. Because of the cost involved and the need to attract and hold the attention of potential customers, advertisements often must be brief. (for some prd. Billboards to brief) PUBLICITY – Involves placing newsworthy information about a company, product, or person in the media. • A business can use publicity to promote particular events, such as the groundbreaking ceremonies for a new store, • promote particular products, such as a new line of cell phones, • but the principle function of publicity , however , is building an image. Image • Is the way a business or organization is defined in people’s minds. Publicity (cont.) Publicity can…? – Improve a businesses image or favorability within the community. (Example. BP) Some examples of business activities that are pure image builders include: • sponsoring cultural events such as concerts and art exhibits, • awarding scholarships and prizes, • and donating land. Advertising v?s Publicity • How does publicity differ from advertising? – Publicity is FREE! (at least in terms of its placement) – Advertising is not free in terms of its placement, you have to pay for it. (Story on news vs. ad on the same show) Advantages of Publicity • Its free! • Audience for news is huge. • The sources that produce it are held in high esteem by the public. • News is viewed as more objective as ads. • People are more likely to believe news stories. Disadvantages of Publicity • Businesses give up much of the control of the message with publicity • The timing and how the message is aired is lost with publicity • Not all publicity is positive. Sales Promotion & Personal Selling • Sales Promotion– Is considered as all marketing activities other than personal selling, advertising, and publicity • Objective- to increase sales, inform customers about new products, and to create a positive store or corporate image http://www.youtube.com/watch?v=BDcTSTMKfbE (Promotional Process) Video: Trade & consumer Sales Promotion (cont.) • Characteristics of sales promotion – Involves short term activities vs. advertising and publicity. – Usually offers some incentive to make a purchase – Can be used in all channels of distribution with manufacturers, wholesalers, retailers, and consumers Sales Promotion (cont.) • Sales promotions may be either trade (business-to-business) oriented or consumer oriented. – Two Types: Trade Promotion & Consumer Sales Promotion Trade Promotions -Are sales promotion activities designed to gain manufacturers’, wholesalers’, and retailers’ support for a product. (4 of them) 1. Slotting Allowances -A cash premium paid by the manufacturer to a retail chain for the costs involved in placing a new product on its shelves. -Can range from $1,000 to $100,000 per product -Also pays for charges for store shelves and penalties if product doesn’t sell -Also pays for store advertising and display costs Trade Promotions (cont.) 2. Buying Allowances -A special price discount given by manufacturers to wholesalers and retailers to encourage them to either buy a product or buy a larger quantity of a product. -Because of the price discounts retailers and wholesalers make more $ on each product they sell encouraging them to sell/promote the products more effectively Trade Promotions (cont.) 3. Trade Shows and Conventions -Are designed to reach wholesalers and retailers. They provide: -Business opportunities to introduce new products, -encourage increased sales of existing products, and -gain continued company and product support Trade Promotions (cont.) 4. Sales Incentives -Are awards given to managers and employees who successfully meet or exceed their company’s set sales quota for a particular product or line of products. Awards may include: -Cash and Prizes -Trips http://www.youtube.com/watch?v=4gbVVzffT-0 (3M- Sales incentive Trip) Consumer Sales Promotions – Sales promotion efforts designed to encourage customers to buy a product. There are five (5): • • • • • Licensing Promotional Tie-ins Visual Merchandising and Displays Premiums and incentives Product samples Consumer Sales Promotions (cont.) 1. Licensing- an increasingly popular form on consumer promotion. – 1.5 billion retail sales are generated by licensing – Average of 225 licenses granted each year – Companies, movie makers, sports teams, and celebrities etc. may license their: -Logo’s, trademark, trade characters, names and likenesses, or personal endorsements to a business to be used in promoting the business’s product. http://www.youtube.com/watch?v=A3rfm5ASwuI (Lic. Example McD.) Consumer Sales Promotions (cont.) 2. Promotional Tie-ins – Involve sales promotional arrangements between one or more retailers or manufacturers. They combine resources (advertising and sales promotion activities) to do a promotion that creates additional sales for each partner by increasing customer response • Can be complex with several companies, • or can be simple with just two companies • Can be local, regional, or national http://www.huffingtonpost.com/2012/11/09/justin-bieber-taylor-swiftmacys-ad-video_n_2102545.html (Celebs. products sold at Macy’s) Consumer Sales Promotions (cont.) 3. Visual Merchandising and Displays – Visual Merchandising refers to the coordination of all physical elements in a place of business so that it projects the right image to its customers – Displays refer to the visual and artistic aspects of presenting a product to a target group of customers. They include: Window, floor, counter, and other in-store displays Consumer Sales Promotions (cont.) 4. Premiums and incentives -Designed to increase sales by building product loyalty and attracting new customers -Premiums are low cost items given away free to consumers as a condition of purchase. There are four (4) basic types: -Coupons, -factory packs, -traffic builders, -coupon plans. Consumer Sales Promotions (cont.) 4. Premiums and incentives (cont) • Coupon-Certificates given to customers for cash discounts on goods or services. (used by manufacturers & retailers & sent/given to customers in many ways) • Factory pack-Free gifts placed in product packages. (ex. Cereal boxes) Consumer Sales Promotions (cont.) Premiums and incentives • Traffic builders- Low cost premiums, such as pens, key chains, and calendars given to customers for visiting a store or event • Coupon plans-long term programs offering a variety of premiums in exchange for labels, coupons, or other tokens from on or more purchase. (ex. Soup labels or Box tops) Consumer Sales Promotions (cont.) Premiums and incentives • Are there costs involved with premiums and incentives? – Yes, and the costs are ultimately paid for by the businesses offering them. • Ex. Coupons –retailers send them to HQ, clearing houses to be sorted and sent to redemption centers where the retailer is paid the face value of the coupon. Consumer Sales Promotions (cont.) 5. Product Samples- A free trial size of a product that is sent through the mail, distributed door-to- door, or through retail stores and trade shows. Good for introducing new products. (ex. Detergents, toothpastes. Shampoo, and deodorants) Personal Selling • Personal Selling-Communicating with customers by making an oral sales presentation to one or more potential buyers. (sales people) Two types of sales personnel: 1. Order taking- store emp. 2. Order getting-sales reps. Personal Selling (cont.) Order takers- Cashiers, counter clerks, and sales associates, perform routine tasks. Set up displays, stock shelves, answer customer questions, and operate cash registers. Order getters- such as professional salespeople inform customers and help them to buy. (more extensive training) Personal Selling (cont.) Advantages of personal selling: -Is designed to complete a sale once a customer is attracted to a business by advertising, publicity, or sales promotion. -If personal selling is done well it will improve customer satisfaction. -Personal selling is the most flexible and individualized of the promotion types Personal Selling (cont.) Disadvantages of personal selling: -Sales people can only help one customer at a time -Sales people must fully understand the sales process so there is more training needed= $ -Poor personal selling can hurt customer satisfaction The promotional Mix -a combination of different types of promotion. Businesses decide on the mix that will be most effective in persuading customers or other businesses to purchase and support the businesses products. (ex. Walt Disney Co.) -uses local and national advertising; publicity; sales promotion; and personal selling to continue to attract customers. How they work together -Advertising creates awareness while -publicity creates a favorable image and -Sales promotion stimulates sales and -Personal selling helps the customer complete the sale