©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-0 Chapter 14 Conversing with the Customer: Promotional Strategy, Interactive Marketing, and Database Marketing

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-1 Chapter Objectives_1  Understand the communication model  List and describe the elements of the promotion mix  Explain the stages in developing the promotion plan  Explain the current trend toward interactive promotion strategies

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-2 Chapter Objectives_2  Explain why database marketing is increasingly popular and how databases are developed and managed  Explain how firms implement integrated marketing communications and why some marketers resist it

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-3 Role of Promotion  Promotion is communication by marketers that informs, persuades, reminds, and builds relationships with potential buyers of a product to influence an opinion or elicit a response.  IMC is a plan for optimal use of the elements of promotion: advertising, personal selling, sales promotion, and public relations

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-4 Promotion Mix  Advertising  Sales Promotions  Public Relations  Personal Selling

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-5 Advertising  Non-personal communication from an identified sponsor using the mass media –can convey rich and dynamic images –can establish and reinforce brand identity –can communicate factual information –can remind customer to buy

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-6 Sales Promotion  Programs that build interest or encourage purchase of a product through the use of an incentive in a specified time period –coupons –contests –rebates –premiums

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-7 Publicity and Public Relations  Portray an organization and its products positively by influencing the perceptions of various publics –writing press releases –holding special events –conducting and publishing consumer surveys –putting a positive spin on negative news

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-8 Developing the Promotion Plan  Framework for developing, implementing, and controlling the firm’s promotional activities

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition 14-9 Step 1: Establish Promotion Objectives  Objectives will change depending on where consumers are on the path to loyalty  Some objectives might be –create awareness –inform the market –create desire –encourage trial –build loyalty

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Step 2: Identify Influence on the Promotion Mix  Mix must be tailored for each situation Push means that the company seeks to move its products through the channel by convincing channel members to offer them and entice their customers to select these items Pull means that the company relies on consumers to learn about and express desire for its products

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Step 3: Determine and Allocate the Total Promotion Budget  Top-down budgeting techniques –percentage-of-sales method –competitive parity  Bottom-up budgeting technique –objective-task method

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Step 4: Allocate Budget to Specific Promotion Mix  Organizational factors  Market potential  Market size

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Step 5: Designing the Promotion Mix  Which elements of promotion will be used?  What message is to be communicated? –Type of appeal? –Structure of appeal?  What communication channels should be employed?  What role will advertising, sales promotion, public relations, and selling play?

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition The AIDA Model  Attention  Interest  Desire  Action

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Step 5: Evaluate the Effectiveness of the Promotion Mix  Is the plan working? –Measure response to sales promotions –Measure brand awareness, recall, and image before and after ad campaign –Analyze and compare sales performances by territory and sales force –Clip articles appearing in media

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Interactive Marketing  Attention Economy –The amount of information seems infinite; our ability to get it is limited by the time we can spend looking –Interactive media are in the business of buying and selling people’s attention  Customized marketing communications yield a measurable response in the form of a purchase or request for more information

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Levels of Interactive Response  First-order response: product offer directly yields a transaction  Second-order response: product offer results in some form of customer feedback but it isn’t a transaction –request for more information –request NOT to receive more information

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Database Marketing  Critical to interactive marketers as they seek to track responses to messages and develop a dialogue with customers  Allows the organization to learn customer preferences, fine-tune and test offerings, build relationships

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Database Marketing  Is interactive  Builds relationships  Locates new customers  Stimulates cross-selling  Is measurable  Is trackable

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Putting It All Together  Integrated Marketing Communications (IMC) is “a strategic business process used to plan, develop, execute, and evaluate coordinated, measurable, persuasive brand communication programs over time with consumers, customers, prospects, and other targeted, relevant external and internal audiences.”

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition Characteristics of IMC Approach  Focus on customer need for communications  Reliance on customer database to focus messages  Use of consistent messages via diverse communications vehicles  Careful planning of delivery to generate a steady stream of consistent information  Use of several elements of the promotional mix

©2003 Prentice Hall, IncMarketing: Real People, Real Choices 3rd edition The IMC Planning Model  Start with a Customer Database  Develop Promotional Strategies  Implement Specific Promotional Tactics  Evaluate IMC Communications –First-order responses –Second-order responses –Attitudes toward brand and firm