Promotional Concepts & Strategies Ch. 17 ME

Promotion and Promotional Mix Section 17.1 Promotion and Promotional Mix

The Concept of Promotion Promotion – is persuasive communication Informs people about their products and services To enhance public image and reputation, and persuade people that their products are valuable Product Promotion – to convince prospects to select its products or services instead of a competitor’s brands Promotional activities explain the major features and benefits Helps companies foster good relations with existing customers Institutional Promotion – is used to create a favorable image for a business, help it advocate change, or take a stand on trade or community issues Example: maintaining an informational Web site

Type of Promotion in the Promotional Mix Personal Selling Advertising Direct Marketing Sales Promotion Public Relations

Type of Promotion in the Promotional Mix Personal Selling – requires that a company employ sales representatives who generate and maintain direct contact with prospects and customers Costliest form of promotion Advertising – is a form of non-personal promotion Pay to promote ideas Can be found anywhere Is “one-way” communication

Type of Promotion in the Promotional Mix Direct Marketing – is a type of advertising directed to a targeted group of prospects and customers rather than to a mass audience Two forms: Direct Mail – sent via regular mail to a home or business Electronic Direct mail – e-mail Goal – to generate sales or leads for sales representatives to pursue Gives recipients an incentive to respond Is “one-way” communication

Type of Promotion in the Promotional Mix Sales Promotion – represents all marketing activities – other than personal selling, advertising, and public relations – to stimulate purchasing and sales According to American Marketing Association (AMA) Objectives: Increase sales Inform potential customers about new products Create a positive business or corporate image

Type of Promotion in the Promotional Mix Public Relations (PR) – activities enable an organization to influence a target audience Try to create a favorable image for a company, its products, or its policies Goal – to cultivate media relations with reporters who cover a specific industry

Writing News Releases News Release – is an announcement that is sent to the appropriate media outlets Publicity – is one tactic that public relations professionals use Placement - Involves bringing news or newsworthy information about an organization to the public’s attention Main function – is to develop a positive perception or awareness of an organization in the marketplace Advantages – free; viewed as more objective; appears more credible Disadvantages – is content; not easily controlled; negative stories

The Concept of the Promotional Mix Promotional Mix – a combination of strategies and a cost-effective allocation of resources Business follow a series of steps that range from identifying the target to measuring the results Strategies are designed to compliment one another Elements must be coordinated Sales personnel need to be aware Promotional Budget – is a percentages of sales, or dictated by revenue and operational costs, to set an amount allocated for promotion use

The Concept of the Promotional Mix The Push-Pull Concept Push Policy – to promote a product to large retailers to sell its products, a manufacturer may to use a mix of personal selling, advertising and buying discounts Is used only with the next partner in the distribution channel Main Purpose – is to convince a retailer to stock the products being promoted Pull Policy – use a different promotional mix of local and national advertising, in-store displays, sales promotion, and public relations to reach consumers Directs promotion towards consumers

Section 17.2 Type of Promotion

Sales Promotion Sales Promotion – are incentives that encourage customers to buy products or services Used to encourage customers Supported by advertising Either business-to-business (B2B) or business-to-consumer (B2C)

Trade Promotions Trade Promotions – are sales promotion activities designed to get support for a product from manufactures, wholesales, and retailers More money is spent on promoting to businesses than consumers Need good business ethics to be fair Major Trade Promotions include: Promotional allowances Cooperative advertising Slotting allowances Sales force promotions Trade show and conventions

Trade Promotions Promotional Allowances – represent cash payments or discounts given by manufacturers to wholesalers or retailers for performing activities to encourage sales Cooperative Advertising – a manufacturer supports the retailer by helping to pay for the cost of advertising its product likely Slotting Allowances – is a cash premium paid by a manufacturer to a retailer to help the retailer cover the costs of placing the manufacturer’s product on the shelves Sales Force Promotion – are awards given to dealers and employees who successfully meet or exceed a sales quota Trade Shows & Conventions – showcase a particular line of products

Consumer Promotions Consumer Promotions – are sales strategies that encourage customers and prospects to buy a product or service Support the components of the promotional mix Major consumer sales devices include: Coupons Premiums Deals Incentives Product Samples Sponsorship Promotional Tie-Ins, Cross-Promotion, & Cross-Selling Product Placement Loyalty Marketing Programs Online Loyalty Marketing Point-to-Purchase Displays

Consumer Promotions Coupons – are certificates that entitle customers to cash discounts on goods or services Premiums – are low-cost items given to consumers at a discount or for free Three types are: Factory Packs – are free gifts places in product packages Traffic Builders – are low-cost Coupon Plans – are ongoing programs offering a variety of premiums in exchange for labels or coupons obtained from a product or label

Consumer Promotions Deals (price packs) – offer short-term price reductions that are marked directly on the label or package Incentives – create customer excitement and increase sales Are higher-priced products earned and given away through: Contests – are games or activities that require the participant to demonstrate a skill Sweepstakes – are games of chance Rebates – are discounts offered by manufacturers to customers who purchase an item during a given time period

Consumer Promotions Product Samples – is a free-trial size of a product sent through the mail, distributed door-to-door, or given away to retail stores and trade shows Sponsorships – company pays a fee for the to promote itself and its products or services at or on a set location Negotiate the right to use logos and names on retail products High-profile promotional medium Title Sponsor – is an organization that pays to have its name incorporated into the name of the sponsored location

Consumer Promotions Promotional Tie-Ins (Cross-Promotion, & Cross-Selling) - involve sales promotional arrangements between one or more retailers or manufacturer Partners combine their resources to conduct a promotion that will create additional sales for each partner Can be complex and involve several companies Increasingly popular on the internet Product Placement – is a consumer promotion that involves using a brand-name product in a movie, television show, sporting event, or even in a commercial for another product

Consumer Promotions Loyalty Marketing Program (frequent buyer program) – reward customers for patronizing a company Customer Loyalty – means that customers are so satisfied with a brand or retailer that they continue to buy that brand or patronize that retailer even when they have other from which to choose Online Loyalty Marketing – online version, offered by web only companies, of loyalty marketing Point-of-Purchase Displays – are displays designed primarily by manufacturers to hold and display their products Usually placed in high traffic areas and promote impulse purchases