1 The Role of Promotion Promotion- any form of communication a business or organization uses to inform, persuade, or remind people about its products and improve its public image. Product promotion - used to convince potential customers to buy products from it instead of from a competitor. –Explains major features and benefits of its products –Tells where those products are sold –Advertises sales on those products –Answers customer questions –Introduces new products Example: a business’s one-time announcement of its half price sale in the local newspaper.

The Role of Promotion How does promotion benefit customers? –Promotion helps them to select appropriate products. 2

The Role of Promotion In which stage of a product’s life cycle do promotional activities focus on differences between competing products? –Growth 3

The Role of Promotion What is an example of an external factor that affects promotion? –Government regulation of ads Zoning laws determine billboard locations Can’t lie about product – fraud Restrict advertising to children –Children are impressionable, and the wrong kinds of advertising can affect their development Stereotype - A generalization, usually exaggerated or oversimplified and often offensive, that is used to describe or distinguish a group. Example: a television commercial depicts a woman mopping the kitchen with a new floor cleaner. 4

The Role of Promotion Materialism is interest in and desire for money, possessions, etc, rather than spiritual or ethical values –Example: You can increase your social status by purchasing this product. 5

6 The Role of Promotion Institutional Promotion- used to create a favorable image for the business. Does not directly sell a certain product. However, may ultimately result in increased sales of a company’s products. An objective of institutional promotion is to demonstrate the organization’s role in community affairs.

7 Four Types of Promotion 1. Advertising - any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Six Advantages of Advertising –1. A large number of people usually see the advertiser’s message –2. Costs per potential customer are usually lower than other forms of promotion –3. Can choose the most appropriate media to reach target mkt –4. Can control the content of an advertisement –5. Ads are subject to repeat viewing –6. Ads can “presale” products

8 Four Types of Promotion Four Disadvantages of Advertising –1. Cannot focus well on individual needs –2. Some forms of advertising can be too expensive for many businesses –3. Sometimes advertising is wasteful and inefficient - message may be spent on non-potential customers –4. Advertising must be brief

9 Four Types of Promotion 2. Publicity - placing newsworthy information about a company, product, or person in the media. Can be used to promote particular events and promote particular products. The main purpose of publicity is to build an image. Image - the way a business or organization is defined in people’s minds. An example of publicity is a company news release.

10 Four Types of Promotion Advantages of Publicity –Publicity is free; advertising is not –Can be used to create a positive image within the community –Viewed as being more credible or believable than advertising –Viewed as news, people pay more attention to publicity Disadvantages of Publicity –Give up much of your control of your message –Not all publicity is positive

11 Four Types of Promotion 3. Sales Promotion - All marketing activities, other than personal selling, advertising, and publicity, that are used to stimulate consumer purchasing and sales effectiveness. Objectives of Sales Promotion –Increase sales –Inform customers about new products –Create a positive store or corporate image 3 Characteristics of Sales Promotion –Short term activities –Offers some type of incentive –Can be successfully used in all channels of distribution

12 Four Types of Promotion Sales promotion can be either consumer or trade oriented Trade Promotions - sales promotion activities designed to gain manufacturers’, wholesalers’, and retailers’ support for a product. More money is spent on promoting to businesses than to consumers. –1. Slotting allowances - a cash premium paid by the manufacture to a retail chain for the costs involved in placing a new product on its shelves. –2. Buying allowances - special price discount given by manufacturers to wholesalers and retailers to encourage them to either buy a product or buy a larger quantity. –3. Trade Shows and Conventions - designed to reach wholesalers –4. Sales incentives - awards given managers and employees who successfully meet or exceed their company’s set sales quota.

13 Four Types of Promotion Consumer Sales Promotions - designed to encourage customers to buy a product. –1. Licensing - Organizations, such as manufactures, movie makers, sports teams, and celebrities, may license for a fee their logo, trademark, trade characters, names and likenesses, or personal endorsements to a business to be used in promoting the business’s products. –2. Promotional tie-ins - involve sales promotional arrangements between one or more retailers or manufacturers. They combine their resources (advertising and sales promotional activities) to do a promotion that creates additional sales for each partner.

14 Four Types of Promotion –3. Visual Merchandising and Displays - –Visual Merchandising - the coordination of all physical elements in a place of business so that it projects the right image to its customers –Displays - visual and artistic aspects of presenting a product to a target group of customers.

15 Four Types of Promotion –4. Premium and Incentives - most popular and frequently used sales promotion type –Premiums - low cost items given away free to consumers as a condition of purchase. Coupons - certificates given to customers entitling cash discounts Factory Packs (in-packs)- free gifts placed in product packages Traffic Builders - low cost premiums like key chains, pens Coupon Plans - ongoing programs in exchange for labels, coupons, or other tokens from one or more purchases –Incentives - higher-priced products given in contests or sweepstakes –5. Product Samples - free trial size of a product that is sent through the mail, distributed door-to-door, or through retail stores and trade shows

16 Four Types of Promotion Advantages of Sales Promotions –Unique and has special appeal to a potential customer –Helps build customer loyalty Disadvantages of Sales Promotions –Difficult to end without the customers becoming dissatisfied –Store image and sales can suffer if the promotion is not properly planned and managed –Only designed to supplement other promotional efforts and cannot make up for poor products

17 Four Types of Promotion 4. Personal Selling - making an oral sales presentation to one or more potential buyers. On a per contact basis, personal selling is the most expensive form of promotion. –Order-taking personnel - cashiers, counter clerks, and sales associates, perform routine tasks. –Order-getting personnel - professional salespeople, are more involved in informing customers and helping them to buy. Usually sell big ticket items like real estate, cars, appliances, and industrial goods –Personal selling is generally emphasized for complex, technical products sold to industrial users.

18 Four Types of Promotion Promotional Mix - a combination of different types of promotion. A business decides on a promotional mix that will be most effective in persuading customers or other businesses to purchase and support the business’s products.

19 Promotional Mix Factors affecting the selection of a promotional mix –Good, Service, or Idea Type of product Product nature Stage of life cycle –Product’s market Type of consumer Number of Consumers Geographical location

20 Promotional Mix –Distribution System –Product’s Company Historical perspective Available funds Size of sales force –Competition Competing businesses within the same industry usually react to each other’s promotional mixes by playing follow the leader.

21 Public Relations Public Relations - any activity designed to create goodwill toward a business. Benefits of PR –Increasing sales –Increasing firm’s good reputation –Increasing customers reception of advertising messages –Spreading accurate information to the public –Conditioning customers to expect quality products from the company –Reducing the impact of problems –Helping to obtain better treatment from government

22 Audiences for PR Internal Audiences - groups within the organization Employee Relations - goal is to keep your employees happy by using: –Tuition reimbursement –Newsletters –Health and wellness programs –Opportunities for communications

23 Audiences for PR External Audiences - groups outside the organization Customers - Satisfied customers = repeat business. Ways to keep customers happy include: –Provide special services and amenities such as gift-wrapping, check cashing, free delivery, free parking, etc. –Advisory boards - panels of consumers that make suggestions about products and businesses –Customer newsletters, annual reports –Customer events - seminars, lunches, entertainment

24 Audiences for PR Community - company sponsors activities that benefit the civic, social, and cultural life of the community. Activities can include: –School partnerships - HP donating computers to the high school –Sponsorship of community events –Scholarships

25 Public Relations News Release - a pre-written story about the company that is sent to various media for publication. It usually contains information about the company’s employees, stores, operations, products, corporate philosophy, or participation in an event or program. Can contain hard or soft news. –Hard News - information that should be announced right away because the public will want to know about it immediately –Soft News - information that does not need to be announced immediately because it will be of as much interest to the public later as it is now

26 Purposes of News Releases To introduce new products To keep the business in the public eye To position the business’s image To support good employee relations To create good community relations

27 Getting Your News Release in the Media Include a captioned photograph with the release Meet media deadlines Write an appropriate number of releases Direct the release to a specific person Advise the staff that you have sent out a release Reread the release after setting it aside Keep a copy of every release Send a cover letter with the release Send a thank-you note after the release is used Avoid pressuring the editor Avoid mentioning publicity or advertising Avoid playing favorites

28 Public Relations Press Kit - a folder containing articles, news releases, feature stories, and photographs about a company, product, or person. Press kits are given to the media to assist them in reporting on the intended news item. Press Conference - a meeting in which media members are invited by the business or organization to hear an announcement about a newsworthy event.

Technology in Promotion New technology enables businesses to create individualized messages that impact their promotional mix. Information can be communicated by more venues and messages can be customized. –Example: Social media such as Facebook or Linked In; 29

International promotional activities A business must understand that the laws governing promotional activities vary by country. 30