Introduction to Promotion Lecture One MKT 385 Introduction to Promotion

Integrated Marketing Communications a concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines - for example, general advertising, direct response, sales promotion, and public relations- and combines these disciplines to provide clarity, consistency, and maximum communications impact. Slide 1-1 Irwin/McGraw-Hill The McGraw-Hill Companies, Inc., 1998 3 3

Elements of the Promotions/Communications Mix Advertising Sales Promotion Publicity/PR Management Personal Selling Direct Marketing AND Social Media Marketing

Advertising “salesmanship in print” Albert Lasker Generally Paid ( except PSAs) Identifiable Sponsor Mass Media Inform or Persuade Structured communication

Advertising Advantages Disadvantages Cost of Production Cost Effective Emotional Appeals Brand Equity Changing technology with Interactive media (Internet) and nontraditional media (blimps, shopping carts) Disadvantages Cost of Production Clutter Zipping/Zapping

The Communication Process Source Encoding Message Channel Decoding Receiver Feedback Noise

How Does The Communication Process Relate to Advertising ? Source Encoding Message Channel Decoding Receiver Feedback Noise Sponsor Appeal Design Message Autobiographical, narrative, drama Medium Reception process Consumer Implied (ideal), sponsorial (management), actual Purchase/Call Distractions

Functions and Effects of Advertising To identify products and differentiate To communicate information about the product, features and location To stimulate trial To stimulate distribution To build value, brand preference, loyalty Lower Costs

Economic Role of Advertising Market Power School less price sensitivity distraction encourages loyalty differentiates Market Competition School increases sensitivity stimulates competition lower prices for everyone!

Economic Impacts of Advertising Value - perception of added value Prices - are they raised or lowered? Competition Consumer Demand Consumer Choice Business Cycle

Advertising The Major Players The Advertiser The Agency The Media

Classifications of Advertising Advertising to Consumer Markets Retail advertising, product advertisements, branding PSAs Advertising to Business Markets Business to Business Professional – teachers, lawyers, doctors Trade – aimed at resellers Agricultural – farmers and agribusiness Advertising To The Consumer Market National Advertising - advertising done by a company on a nationwide basis or most regions of the country that is targeted at the consumer market Retail/Local Advertising - advertising done by major retailers or smaller local merchants to encourage consumers to patronize their stores or use their local services (banking, restaurants) Primary versus Selective Demand Advertising - primary demand advertising - advertising designed to stimulate demand for the general product class or an entire industry Selective demand advertising - advertising that focuses on creating demand for a specific company's product or service Advertising To the Business and Professional Market Industrial Advertising - advertising that is targeted at individuals who influence the purchase of industrial goods or other services Professional Advertising - advertising targeted to professional groups such as doctors, lawyers, dentists or engineers Trade Advertising - advertising directed to resellers such as wholesalers and retailers to encourage them to carry a company's products Slide 1-3 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1998 5 5

What is Marketing? The process of planning and executing the conception, pricing, distribution and promotion of ideas, goods and services to create exchanges that satisfy the perceived needs, wants and objectives of individuals and organizations

4 P’s Influence on Advertising Product Consumer packaged goods advertising Service advertising Hi-tech advertising Price Image advertising (brand) Sale advertising Price advertising

4 P’s Influence on Advertising Place (Distribution) Global advertising – unified message International advertising – specific messages by market Promotion – see following slides!

Sales Promotion Incentive or extra value to encourage the consumer to act in a certain fashion. Examples: coupons, sweepstakes, trade shows, rebates, free samples

Sales Promotion Advantages/Disadvantages Short-term sales boost stimulates trial incentives for intermediaries to cooperate Sacrifice long-term performance for short term gain Clutter Sacrifice brand equity

Public Relations the management function which evaluates public attitudes, identifies the policies and procedures of an individual or organization with the public interest, and executes a program of action to earn public understanding and acceptance.

Publicity nonpersonal communication regarding the organization, product, service or idea that is not directly paid for nor run under identified sponsorship, usually coming from a news story, editorial, or announcement about an organization or its products and services. Additional tools include: collateral materials such as press kits, instruction booklets, brochures, catalogs, fliers

Publicity/PR tools Advantages/Disadvantages Credibility Low Cost Lack of Control Negative Publicity very harmful and difficult to overcome Miss the Target Audience

Personal Selling involves the direct contact between the buyer and seller in which the seller attempts to persuade and assist the prospective customers to purchase the company’s products or service or to act on an idea.

Personal Selling Advantages/ Disadvantages High cost per contact uniformity of message delivery Flexibility Immediate Feedback

Direct Marketing Any direct communication delivered the consumer to designed to generate a response or a transaction in the form of an order, request for information or visit Direct mail catalogs, specialty promos Telemarketing Direct selling Direct response advertising

Direct Marketing Negatives Positives Viewed often as sales oriented, not relationship oriented Intrusive Women working Do Not Call Lists Expensive per contact Positives Measurable results Many forms work around customer schedules

Social Media Marketing Recognizing and utilizing social media outlets to promote interest, communication and dialogue relating to a product, individual, service or event Social Media can be utilized by developing pages, boosting posts, advertising, etc. to form relationships in the marketplace

Evolution of Advertising Early Ads Gutenberg’s invention of the printing press changed the world we live in … Now we could become literate, communicate information and sell products! 1472 – first ad appeared in the form of a handbill tacked on church doors selling prayer books By the early 1700’s clutter takes hold! 1704 – Boston Newsletter begins to carry ads and Ben Franklin makes them artsy!

Industrial Age and Ad Agencies Second half of the 19th century through the 20th Commodities markets saturated and branding began in the form of consumer packaged goods Advertising primarily fell to wholesalers who disseminated information on goods Volney Palmer set up business as a media buyer N.W. Ayer & Sons was the first agency to charge commission based on space

Evolution of Advertising Golden Age of Advertising (1946-1970) Following the advent of radio, television again inspired creativity and advertising flourishes Market segmentation, positioning, USP Post Industrial Age Demarketing to slow demand for products consuming and manufactured from natural resources

Global Interactive Age Evolution of cable and satellite TV (segmentation), TiVo (ad skipping), digital technology (how to compete?) Use of web sites, social networking, downloadable entertainment with sponsorships