1 Copyright ©2009 by Cengage Learning Inc. All rights reserved Designed by Eric Brengle B-books, Ltd. CHAPTER 16 Promotional Planning for Competitive Advantage Prepared by Amit Shah Frostburg State University Marketing Lamb, Hair, McDaniel 10

Copyright ©2009 by Cengage Learning Inc. All rights reserved Learning Outcomes 2 Discuss the role of promotion in the marketing mix Describe the communication process Explain the goal of promotion LO I LO 2 LO 3

Copyright ©2009 by Cengage Learning Inc. All rights reserved Learning Outcomes 3 Discuss the elements of the promotional mix Discuss the AIDA concept and its relationship to the promotional mix Discuss the concept of integrated marketing communications Describe the factors that affect the promotional mix LO 5 LO 6 LO 7 LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Role of Promotion in the Marketing Mix 4 Discuss the role of promotion in the marketing mix LO I

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Role of Promotion 5 Promotion Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response. LO I

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Role of Promotion 6 LO I Promotional Strategy Promotional Strategy A plan for the optimal use of the elements of promotion:  Advertising  Public Relations  Sales Promotion  Personal Selling CompetitiveAdvantage

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Role of Promotion in the Marketing Mix 7 LO I Overall Marketing Objectives Marketing Mix Product Place Promotion Price Marketing Mix Product Place Promotion Price Target Market Promotional Mix Advertising Public Relations Sales Promotion Personal Selling Promotion Plan Promotional Mix Advertising Public Relations Sales Promotion Personal Selling Promotion Plan

Copyright ©2009 by Cengage Learning Inc. All rights reserved Competitive Advantage 8 LO I Unique features Excellent service Low prices Rapid delivery High product quality

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME The Role of Promotion in the Marketing Mix 9 LO I

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Communication 10 Describe the communication process LO 2

Copyright ©2009 by Cengage Learning Inc. All rights reserved Communication 11 LO 2 Communication Online The process by which we exchange or share meanings through a common set of symbols.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Communication 12 LO 2 Categories of Communication Categories of Communication Interpersonal Communication Interpersonal Communication Mass Communication Mass Communication

Copyright ©2009 by Cengage Learning Inc. All rights reserved Marketing Communication 13 LO 2 As SendersAs Receivers  Develop messages  Adapt messages  Spot new communication opportunities  Inform  Persuade  Remind

Copyright ©2009 by Cengage Learning Inc. All rights reserved 14 LO 2 Noise Sender Encoding Message Feedback Channel Feedback Channel Message Channel Message Channel Decoding Message Decoding Message Receiver The Communication Process

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Impact of Blogging 15 LO 2 Corporate Blogs Corporate Blogs Sponsored by a company or one of its brands and maintained by one or more of the company’s employees. Noncorporate Blogs Independent and not associated with the marketing efforts of any particular company or brand. Independent and not associated with the marketing efforts of any particular company or brand.

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME The Communication Process 16 LO 2

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Goals of Promotion 17 Explain the goals of promotion LO 3

Copyright ©2009 by Cengage Learning Inc. All rights reserved Goals of Promotion 18 LO 3 Informing Reminding Persuading Target Audience Target Audience Online

Copyright ©2009 by Cengage Learning Inc. All rights reserved Goals of Promotion 19 LO 3 Informing Reminding Persuading Target Audience Target Audience PLC Stages PLC Stages: Introduction Early Growth PLC Stages: Growth Maturity PLC Stages: Maturity

Copyright ©2009 by Cengage Learning Inc. All rights reserved Goals of Promotion 20 LO 3  Increase awareness  Explain how product works  Suggest new uses  Build company image Informative Promotion

Copyright ©2009 by Cengage Learning Inc. All rights reserved Goals of Promotion 21 LO 3 Persuasive Promotion  Encourage brand switching  Change customers’ perceptions of product attributes  Influence immediate buying decision  Persuade customers to call

Copyright ©2009 by Cengage Learning Inc. All rights reserved Goals of Promotion 22 LO 3 Reminder Promotion  Remind customers that product may be needed  Remind customers where to buy product  Maintain customer awareness

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Promotional Mix 23 Discuss the elements of the promotional mix LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Promotional Mix 24 LO 4 Promotional Mix Promotional Mix Combination of promotion tools used to reach the target market and fulfill the organization’s overall goals.  Advertising  Public Relations  Sales Promotion  Personal Selling

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Promotional Mix 25 LO 4 Advertising Any form of impersonal (one-way) paid communication in which the sponsor or company is identified.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Advertising Media 26 LO 4 Traditional Advertising Media Traditional Advertising Media New Advertising Media  Television  Radio  Newspapers  Magazines  Books  Direct mail  Billboards  Transit cards  Internet  Banner ads  Viral marketing  E- mail  Interactive video

Copyright ©2009 by Cengage Learning Inc. All rights reserved Public Relations 27 LO 4 Public Relations Public Relations The marketing function that evaluates public attitudes, identifies areas within the organization that the public may be interested in, and executes a program of action to earn public understanding and acceptance.

Copyright ©2009 by Cengage Learning Inc. All rights reserved The Function of Public Relations Maintain a positive image Educate the public about the company’s objectives Introduce new products Support the sales effort Generate favorable publicity 28 LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved Personal Selling 29 Personal Selling Personal Selling LO 4 A purchase situation involving a personal, paid- for communication between two people in an attempt to influence each other.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Personal Selling 30 LO 4 Traditional Selling Traditional Selling Relationship Selling Relationship Selling

Copyright ©2009 by Cengage Learning Inc. All rights reserved Sales Promotion 31 LO 4 Sales Promotion Online Marketing activities--other than personal selling, advertising, and public relations--that stimulate consumer buying and dealer effectiveness.

Copyright ©2009 by Cengage Learning Inc. All rights reserved Sales Promotion 32 LO 4 End Consumers End Consumers Trade Customers Company Employees Company Employees Free samples Contests Premiums Trade Shows Vacation Giveaways Coupons

Copyright ©2009 by Cengage Learning Inc. All rights reserved Characteristics of the Elements in the Promotional Mix 33 LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved Characteristics of the Elements in the Promotional Mix 34 LO 4 Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Advertising Indirect and impersonal Low Little Delayed One-way Yes Fast Same message to all audiences

Copyright ©2009 by Cengage Learning Inc. All rights reserved Characteristics of the Elements in the Promotional Mix 35 LO 4 Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Public Relations Usually indirect, impersonal Moderate to low Little Delayed One-way No Usually fast Usually no direct control

Copyright ©2009 by Cengage Learning Inc. All rights reserved Characteristics of the Elements in the Promotional Mix 36 LO 4 Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Sales Promotion Usually indirect and impersonal Moderate to low Little to moderate Varies Mostly one-way Yes Fast Same message to varied target

Copyright ©2009 by Cengage Learning Inc. All rights reserved Characteristics of the Elements in the Promotional Mix 37 LO 4 Communication Mode Communication Control Feedback Amount Feedback Speed Message Flow Direction Message Content Control Sponsor Identification Reaching Large Audience Message Flexibility Personal Selling Direct and face-to-face High Much Immediate Two-way Yes Slow Tailored to prospect

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME Elements of the Promotional Mix 38 LO 4

Copyright ©2009 by Cengage Learning Inc. All rights reserved Promotional Goals and the AIDA Concept 39 Discuss the AIDA concept and its relationship to the promotional mix LO 5

Copyright ©2009 by Cengage Learning Inc. All rights reserved The AIDA Concept 40 LO 5 AIDA Concept Model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message.

Copyright ©2009 by Cengage Learning Inc. All rights reserved The AIDA Concept 41 Action Desire Interest Attention Cognitive (thinking) Affective (feeling) Conative (doing) LO 5

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME The AIDA Concept 42 LO 5

Copyright ©2009 by Cengage Learning Inc. All rights reserved Integrated Marketing Communications 43 Discuss the concept of integrated marketing communications LO 6

Copyright ©2009 by Cengage Learning Inc. All rights reserved Integrated Marketing Communications 44 LO 6 Integrated Marketing Communications Integrated Marketing Communications The careful coordination of all promotional messages to assure the consistency of messages at every contact point where a company meets the consumer.

Copyright ©2009 by Cengage Learning Inc. All rights reserved IMC Popularity Growth Proliferation of thousands of media choices Fragmentation of the mass market Slash of advertising spending in favor of promotional techniques that generate immediate response 45 LO 6

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME Integrated Marketing Communications 46 LO 6

Copyright ©2009 by Cengage Learning Inc. All rights reserved Factors Affecting the Promotional Mix 47 Describe the factors that affect the promotional mix LO 7

Copyright ©2009 by Cengage Learning Inc. All rights reserved Factors Affecting the Choice of Promotional Mix 48 LO 7 Nature of the product Stage in PLC Target market factors Type of buying decision Promotion funds Push or pull strategy

Copyright ©2009 by Cengage Learning Inc. All rights reserved Stage in the Product Life Cycle 49 LO 7 Light Advertising; pre- introduction publicity Heavy use of Advertising; PR for awareness; sales promotion for trial AD/PR decrease; limited sales promotion; personal selling for distribution Ads decrease; sales promotion; personal selling; reminder & persuasive Advertising, PR, brand loyalty; personal selling for distribution Introduction Growth Maturity Decline Sales ($) Time

Copyright ©2009 by Cengage Learning Inc. All rights reserved Target Market Characteristics 50 LO 7 For…  Widely scattered market  Informed buyers  Brand-loyal repeat purchasers Advertising Sales Promotion Less Personal Selling

Copyright ©2009 by Cengage Learning Inc. All rights reserved Type of Buying Decision 51 LO 7 Advertising Sales Promotion Routine Personal Selling Neither Routine nor Complex Neither Routine nor Complex Advertising Public Relations Print Advertising Complex

Copyright ©2009 by Cengage Learning Inc. All rights reserved Available Funds Trade-offs with funds available Number of people in target market Quality of communication needed Relative costs of promotional elements 52 LO 7

Copyright ©2009 by Cengage Learning Inc. All rights reserved Push and Pull Strategies 53 LO 7 Manufacturer promotes to wholesaler Manufacturer promotes to wholesaler Wholesaler promotes to retailer Wholesaler promotes to retailer Retailer promotes to consumer Retailer promotes to consumer Consumer buys from retailer Consumer buys from retailer PUSH STRATEGY Orders to manufacturer Manufacturer promotes to consumer Manufacturer promotes to consumer Consumer demands product from retailer Consumer demands product from retailer Retailer demands product from wholesaler Retailer demands product from wholesaler Wholesaler demands product from manufacturer Wholesaler demands product from manufacturer Orders to manufacturer PULL STRATEGY

Copyright ©2009 by Cengage Learning Inc. All rights reserved REVIEW LEARNING OUTCOME Factors Affecting Promotional Mix 54 LO 7