Chapter 3: PROMOTION and IMC PLANNING and STRATEGY 3.1

The Promotion Plan A PROMOTION PLAN IS: Direct Extension of Firm’s Marketing Plan Direct Extension of Firm’s Marketing Plan A Specification of the Analysis, Strategy, and Tasks of the Promotional Effort A Specification of the Analysis, Strategy, and Tasks of the Promotional Effort Needed to Conceive and Implement an Effective Promotional Effort Needed to Conceive and Implement an Effective Promotional Effort SIX MAJOR ELEMENTS OF A PROMOTIONAL PLAN ARE: Executive Summary and Overview Executive Summary and Overview Situation Analysis Situation Analysis Objectives Objectives Budgeting Budgeting Strategy Strategy Evaluation Evaluation3.2

Introduction Situation Analysis Objectives Budgeting Strategy Execution Evaluation Stages in the Promotional Plan

The Promotion Plan (con’t) EXECUTIVE SUMMARY & OVERVIEW Executive Summary-States Most Important Aspects of the Plan Executive Summary-States Most Important Aspects of the Plan Overview-What is to be Covered in the Plan in General Terms Overview-What is to be Covered in the Plan in General Terms SITUATION ANAYLSIS Marketers and Agencies Lay Out Most Important Factors Defining the Situations Facing the Firm, and Include: Marketers and Agencies Lay Out Most Important Factors Defining the Situations Facing the Firm, and Include: Demographic Trends Demographic Trends Historical Context Historical Context Industry Analysis Industry Analysis Market Characteristics Market Characteristics Type of Consumer Type of Consumer Geographic Considerations Geographic Considerations Competition Competition3.43.4

The Promotion Plan (con’t) SITUATION ANAYLSIS (con’t) Product Characteristics Product Characteristics Category Category Convenience Goods Convenience Goods Shopping Goods Shopping Goods Specialty Goods Specialty Goods Stages in Product Life Cycle Stages in Product Life Cycle Characteristics of the Firm Characteristics of the Firm Push vs. Pull Strategy Push vs. Pull Strategy Funds Available Funds Available Size of Sales Staff Size of Sales Staff Extent of Firm’s Product Line Extent of Firm’s Product Line3.53.5

The Promotion Plan (con’t) SITUATION ANALYSIS (con’t) Characteristics of the Distribution Characteristics of the Distribution Intensity of Distribution Intensity of Distribution Intensive Distribution Intensive Distribution Selective Distribution Selective Distribution Exclusive Exclusive Length of Trade Channel Length of Trade Channel Types of Trade Partners Types of Trade Partners3.6

A Situation Analysis Needs to Consider the Type of Trade Partners that Will be Promoting The Marketer’s Brand 3.7

OBJECTIVES Lays the Framework for Executions in Promotional Campaign and Identifies Goals of a Marketer in Concrete, Measurable Terms Lays the Framework for Executions in Promotional Campaign and Identifies Goals of a Marketer in Concrete, Measurable Terms Create & Maintain Image for Brand Create & Maintain Image for Brand Increase Customer Awareness & Curiosity about a Brand Increase Customer Awareness & Curiosity about a Brand Change Consumers’ Beliefs & Attitudes about a Brand Change Consumers’ Beliefs & Attitudes about a Brand Belief – Knowledge & Feelings Accumulated about a Brand Belief – Knowledge & Feelings Accumulated about a Brand Attitude is Overall Evaluation of Brand Based on Knowledge/Emotions Attitude is Overall Evaluation of Brand Based on Knowledge/Emotions Influence Purchase Intentions Influence Purchase Intentions Stimulate Trial Use Stimulate Trial Use Convert One-Time Users to Repeat Customers Convert One-Time Users to Repeat Customers Switch Consumers from Competing Brands Switch Consumers from Competing Brands Encourage Brand Loyalty Encourage Brand Loyalty Stimulate More Frequent Use Stimulate More Frequent Use Increase Sales Increase Sales3.8 The Promotion Plan (con’t)

Creating Awareness and Curiosity is a Common Promotional Objective Common Promotional Objective

OBJECTIVES – KEY TERMINOLOGY Brand Image Brand Image Brand Awareness Brand Awareness Top-of-the-Mind Awareness Top-of-the-Mind Awareness Beliefs Beliefs Attitude Attitude Purchase Intent Purchase Intent Trial Usage Trial Usage Repeat Purchase Repeat Purchase Brand Switching Brand Switching Brand Loyalty Brand Loyalty Increasing the Frequency of Use Increasing the Frequency of Use3.10 The Promotion Plan (con’t)

COMMUNICATIONS vs. SALES OBJECTIVES Increase Awareness of Brand Name to 40% of All Consumers in Increase Awareness of Brand Name to 40% of All Consumers in Western US Create Trial Use by 15% of all Teenagers Create Trial Use by 15% of all Teenagers Communicate Superior Brand Performance Features to Target Audience with Series of Advertisements over Next Six Months Communicate Superior Brand Performance Features to Target Audience with Series of Advertisements over Next Six Months CHARACTERISITICS OF WORKABLE PROMOTIONAL OBJECTIVES Establish Quantitative Benchmark Establish Quantitative Benchmark Specify Measurement Methods & Criteria or Success Specify Measurement Methods & Criteria or Success Specify a Time Frame Specify a Time Frame3.11 The Promotion Plan (con’t)

BUDGETING - METHODS Percentage-of-Sales Approach Percentage-of-Sales Approach Unit-of-Sales Approach Unit-of-Sales Approach Share of Market/Share of Voice Share of Market/Share of Voice Funds Available Funds Available Objective & Task Objective & Task3.12

3.13 The Promotion Plan (con’t) BUDGETING FOR ADVERTISING Marketing Research Marketing Research Message Research Message Research Production Costs: Production Companies, Talent, Production Costs: Production Companies, Talent, Site Costs Media Costs Media Costs Agency Commissions/Fees Agency Commissions/Fees Account Personnel Travel Expenses Account Personnel Travel Expenses

BUDGETING FOR SALES PROMOTION Coupon Value and Dealer Handling Charges Coupon Value and Dealer Handling Charges Contest and Sweepstakes Material and Charges Contest and Sweepstakes Material and Charges Brochures and Collateral Material Brochures and Collateral Material Trade Shows & Exhibits Trade Shows & Exhibits Trade Channel Partner Meeting & Entertainment Trade Channel Partner Meeting & Entertainment Premiums Premiums Point-of-Purchase Materials Point-of-Purchase Materials Trade Allowances Trade Allowances Trade Incentives Trade Incentives Trade Training Programs Trade Training Programs Refunds/Rebates Refunds/Rebates3.14 The Promotion Plan (con’t)

Premiums—Like This One Offered by Jell-O—Must be Factored into Budget Planning for Promotion 3.15

The Promotion Plan (con’t) BUDGETING FOR DIRECT MARKETING Uses a Simple Cost-Based Method Uses a Simple Cost-Based Method Exact Bids Obtained - Printing, Sorting, Bundling & Mailing for Print Campaigns Exact Bids Obtained - Printing, Sorting, Bundling & Mailing for Print Campaigns Bids Obtained for Telemarketing, Infomercial or Catalog Selling from External Facilitators Bids Obtained for Telemarketing, Infomercial or Catalog Selling from External Facilitators3.16

Budgeting for Direct Marketing Needs to Consider the Cost of Printing and Mailing Materials 3.17

The Promotion Plan (con’t) BUDGETING FOR WEBSITES & BANNER ADS Costs for Web Sites - $30K to $100K Costs for Web Sites - $30K to $100K Costs for Banner Ads - $10 CPM to $30 CPM Costs for Banner Ads - $10 CPM to $30 CPM3.18

The Promotion Plan (con’t) BUDGETING FOR PUBLIC RELATIONS Most Difficult of All Budgets to Set - Most Expensive Public Relation Occurs During Crises Most Difficult of All Budgets to Set - Most Expensive Public Relation Occurs During Crises Most PR Firms Work on Retainers - Set on an Annual Basis Most PR Firms Work on Retainers - Set on an Annual Basis3.19

The Promotion Plan (con’t) BUDGETING FOR PERSONAL SELLING Recruiting Costs Recruiting Costs Training Costs Training Costs Travel Expenses Travel Expenses Promotional Material - Samples, Catalogs, Product Brochures Promotional Material - Samples, Catalogs, Product Brochures Salaries & Benefits Salaries & Benefits Incentive Programs - Bonuses & Rewards Incentive Programs - Bonuses & Rewards3.20

The Promotion Plan (con’t) STRATEGY Mechanism by which Something is Done Mechanism by which Something is Done Account Planner Assists in Strategy Account Planner Assists in Strategy Works in Advertising Agency & Synthesizes all Relevant Audience Research to Formulate Promotional Strategy Works in Advertising Agency & Synthesizes all Relevant Audience Research to Formulate Promotional Strategy3.21

The Promotional Plan (con’t) EVALUATION Marketer Determines How Promotional Program has Performed - Factor by Factor Marketer Determines How Promotional Program has Performed - Factor by Factor Main Basis for Evaluation - Communications and Sales Objectives Set for the Program Main Basis for Evaluation - Communications and Sales Objectives Set for the Program Chapter 15 - Measuring the Effectiveness of Promotion & IMC - Will Cover in Detail Chapter 15 - Measuring the Effectiveness of Promotion & IMC - Will Cover in Detail3.22

Evaluation of the IMC Program Will Include the Effect on Sales of Various Promotional Tools

IMC Management & Planning STRATEGIC PLANNING OF IMC IS DIFFERENT FROM TRADITIONAL USE OF MULTIPLE PROMOTIONAL TOOLS Outside-in Approach Outside-in Approach IMC Management Planning Requires Comprehensive & Detailed Knowledge IMC Management Planning Requires Comprehensive & Detailed Knowledge Customers Customers Prospects Prospects Knowledge about Customer & Prospects Knowledge about Customer & Prospects IMC Management Plan - Built Around Brand Communications IMC Management Plan - Built Around Brand Communications Control of IMC Management & Planning - Centralized Control of IMC Management & Planning - Centralized Firms Appointing IMC or Marcom Managers Firms Appointing IMC or Marcom Managers3.24

IMC Management & Planning (con’t) MODEL OF IMC MANAGEMENT & PLANNING IMC Model Considers Complete Process IMC Model Considers Complete Process Uses Promotion to Communicate to Target Markets Uses Promotion to Communicate to Target Markets Effectively Deploys Promotional Tools Effectively Deploys Promotional Tools Corporate & Marketing Plans - Understood and Adopted as Part of IMC Plan Corporate & Marketing Plans - Understood and Adopted as Part of IMC Plan Databases - Help Identify & Profile Target Markets Databases - Help Identify & Profile Target Markets Promotional Objective - Dictate Mix of Promotional Tools to Pursue for each Target Promotional Objective - Dictate Mix of Promotional Tools to Pursue for each Target3.25