Chapter 12 Promotion Mix: Communicating Customer Value

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The company’s total promotion mix (also called the marketing communications mix) consists of a specific blend of:  Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.  Sales promotion: Short ‑ term incentives to encourage the purchase or sale of a product or service (coupons, discounts, contests, lottery,…).  Personal selling: Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.  Direct marketing: Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships (direct mails, catalogs, telephone marketing, online marketing,…).  Public relations: Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. The Promotion Mix

Several factors are changing the face of marketing communications:  Consumers are better informed and more communications empowered.  Mass markets have fragmented, leading marketers to a shift away from mass marketing.  Changes in communications technology have created new media for interacting with targeted consumers. These factors have shifted the marketing communications model so that firms are doing less broadcasting and more narrowcasting. Integrated Marketing Communications

A strong need for integrated marketing communications exists. Integrated marketing communications:  Carefully integrating and coordinating the company’s many communication channels to deliver a clear, consistent, and compelling message about the organization and its products.

Shaping the Overall Promotion Mix Nature of advertising:  Can reach masses of geographically dispersed buyers at a low cost per exposure  Can repeat a message many times  Consumers view advertised products as more legitimate  Is impersonal, one-way communication  Can be very costly for some media types

Nature of sales promotion:  Wide assortment of tools which depends on company’s objectives  Attracts consumer attention  Can be used to dramatize product offers  Offers strong incentives to buy  Invites and rewards quick consumer response  Effects are short-lived, what does it mean? Shaping the Overall Promotion Mix

Nature of personal selling:  Involves personal interaction between two or more people  Most effective tool at building preferences  Allows relationship building and two-way communication  Requires long-term commitment to sales force  Most expensive promotion tool Shaping the Overall Promotion Mix

Nature of direct marketing:  Many forms of direct marketing exist.  Direct marketing forms share four primary characteristics: Nonpublic Immediate/directed to a specific person Customized Interactive  Well suited to highly targeted marketing. Shaping the Overall Promotion Mix

Nature of public relations:  Very believable  Reaches people who avoid salespeople and ads  Can dramatize a company or product  Tends to be used as an afterthought  Can be effective and economical Shaping the Overall Promotion Mix

Promotion Mix Strategies Push strategy:  Promotion strategy that calls for using the sales force and trade promotion to push the product through channels. Pull strategy:  Promotion strategy that calls for spending a lot on advertising and consumer promotion to induce final consumers to buy the product. ManufacturerWholesalerRetailerConsumer ManufacturerWholesalerRetailerConsumer

Push vs. Pull Strategies Push strategy Pull strategy ManufacturerWholesalerRetailerConsumer ManufacturerWholesalerRetailerConsumer

Advertising Advertising has been used for centuries. U.S. advertisers spend more than $285 billion each year; worldwide spending exceeds $604 billion. Advertising is used by:  Business firms  Not-for-profit organizations  Professionals  Social agencies  Government

Major Advertising Decisions Setting advertising objectives Setting the advertising budget Developing advertising strategy Evaluating advertising campaigns

Major Advertising Decisions Advertising objective:  Specific communication task to be accomplished with a specific target audience during a specific period of time. Advertising objectives can be classified by purpose:  Inform (e.g., new Crest toothpaste)  Persuade (e.g., emphasize the benefits)  Compare (e.g., between competitors; not allowed in Kuwait, but very common in USA)  Remind (e.g., Coke, Pepsi)

Major Advertising Decisions Setting the advertising budget:  Affordable method  Percentage-of-sales method  Competitive-parity method  Objective-and-task method

Developing advertising strategy:  Creating advertising messages. Message strategy and message execution must break through the clutter  Selecting advertising media. Set reach, frequency, and impact goals  Reach: Percentage of people exposed to ad.  Frequency: Number of times a person is exposed to advertisement.  Media Impact: The qualitative value of a message exposure through a given medium. Choose among major media types Select specific media vehicles Decide on media timing Major Advertising Decisions

Return on advertising investment:  Is equal to the net return on advertising investment divided by the costs of the advertising investment. Evaluating advertising involves:  Measuring the communication effects of an ad—“Copy Testing.”  Measuring the sales effects of an ad: Is the ad increasing sales? Evaluating Advertising and Return on Advertising Investment

Organization of ad function:  Small companies—one person in firm.  Large companies—ad department that may also work with an ad agency.  Advertising agencies employ specialists who perform ad tasks better then the company’s own staff can. Bring outside viewpoints to problem-solving. Wide range of experience. Other Advertising Considerations

Public Relations Public relations:  Building good relations with the firm’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

Public Relations Public relations departments perform the following functions:  Press relations or press agency  Product publicity  Public affairs  Lobbying  Investor relations  Development

Public Relations Role and Impact Public relations:  May strongly impact public awareness at a lower cost than advertising.  Can yield spectacular results.  Is beginning to play an increasingly important brand-building role.

Major Public Relations Tools Corporate identity materials Public service activities Social networking Company Web site News Speeches Special events Written materials Audiovisual materials