1. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-1 Chapter Fourteen Promotion & Pricing Strategies

2. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-2 Promotional Mix Personal Selling Non-Personal Selling Advertising Advertising Trade Shows Trade Shows Direct Mail Direct Mail Sales Promotions Sales Promotions Samples Samples Coupons Coupons Sweepstakes/Contests Sweepstakes/Contests

3. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-3 Objectives of Integrated Marketing Build Brand Equity Build Brand Equity Provide Information Provide Information Manage Demand & Build Sales Manage Demand & Build Sales Differentiate Products Differentiate Products Influence Perceptions, Attitudes, & Buyer Behavior Influence Perceptions, Attitudes, & Buyer Behavior

4. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-4 Components of Integrated Marketing Advertising Advertising Corporate Communication Corporate Communication Crisis Communication Crisis Communication E-Commerce E-Commerce Event Marketing Event Marketing Internal Communication Internal Communication Issues Management Issues Management Marketing Marketing Multimedia Multimedia Public Relations Public Relations Sales Promotion Sales Promotion Strategic Planning Strategic Planning Web Design Web Design

5. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-5 Advertising Today Persuasive Communication Persuasive Communication Guerrilla marketing Guerrilla marketing Viral marketing Viral marketing Infomercials Infomercials Internet Internet Global Advertising Global Advertising

6. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-6 Figure 16.3 Advertising Expenditure by Media

7. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-7 Automotive Marketing Autowrap Autowrap Sales Promotion Sales Promotion Tex Earnhardt rides a live bull Tex Earnhardt rides a live bull Toyota dealer displays fiberglass lions Toyota dealer displays fiberglass lions

8. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-8 Centurys Top Ad Jingles You deserve a break today You deserve a break today Be all you can be Be all you can be Pepsi-Cola hits the spot Pepsi-Cola hits the spot Mm Mm good! Mm Mm good! See the USA in your Chevrolet See the USA in your Chevrolet I wish I were an Oscar Mayer wiener I wish I were an Oscar Mayer wiener Double your pleasure, double your fun Double your pleasure, double your fun Winston tastes good like a cigarette should Winston tastes good like a cigarette should Its the real thing Its the real thing A little dabll do ya A little dabll do ya Source: Source: Advertising Age

9. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-9 Thinking Out of the Box Kentucky Derby jockeys Kentucky Derby jockeys Ads on pants for 1 st time in 2004 Ads on pants for 1 st time in 2004 Marlins painted poles like No.2 pencils from Office Depot in 1994 Marlins painted poles like No.2 pencils from Office Depot in 1994 Spiderman on baseball fields – 2004 Spiderman on baseball fields – 2004 $50-100,000 per team $50-100,000 per team Fenway Park & Yankee Stadium Fenway Park & Yankee Stadium

10. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-10 Do Blatantly Sexy Ads Turn You Off? Source: Source: USA Today

11. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-11 Sex in Advertising BuyMusic.com BuyMusic.com Uncle Bens Rice Uncle Bens Rice Gillettes Satin Care Gillettes Satin Care Dow Jones NewsPlus Dow Jones NewsPlus

12. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-12 Advertising Appeals Honesty Honesty Fear Fear Emotion Emotion Sex Sex Humor Humor Irritation Irritation Cost-Comparison Cost-Comparison

13. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-13 Internet Advertising- 2004 Will reach $22 billion in the U.S. Will reach $22 billion in the U.S. The rest of world will spend $10.8 billion. The rest of world will spend $10.8 billion. $27 billion (10% of all U.S. ad spending) will be siphoned from traditional media $27 billion (10% of all U.S. ad spending) will be siphoned from traditional media Hardest hit: newspapers and direct mail Hardest hit: newspapers and direct mail Source: Source: CIO Web Business, 10/1/1999

14. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-14 Web Advertising Choices Banner Ads Banner Ads Skyscrapers Skyscrapers Bulky Boxes Bulky Boxes Buttons and Big Impressions Buttons and Big Impressions E-mail E-mail Sponsorships Sponsorships Pop-up Ads Pop-up Ads

15. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-15 Office Depot 2003 Back to School starts July 4 th 2003 Back to School starts July 4 th $7.7b school supply market $7.7b school supply market Integrated marketing campaign Integrated marketing campaign E-commerce E-commerce Direct marketing Direct marketing Radio, newspaper (including African- American focus), & TV ads (including Spanish-language stations) Radio, newspaper (including African- American focus), & TV ads (including Spanish-language stations)

16. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-16 Steps in Personal Selling Prospect/QualifyProspect/Qualify PreapproachPreapproach ApproachApproach PresentationPresentation ObjectionsObjections CloseClose Follow-upFollow-up

17. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-17 Public Relations Steps Listen Listen Change/Develop Change/Develop Inform InformPublicity Free Free More Effective Than Ad More Effective Than Ad Believable Believable No Control No Control No Repetition No Repetition

18. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-18 PR in Not–for-profit 3-26-03 WSJ 3-26-03 WSJ Military are battling more than the enemy. Competing for valuable press attention that some believe can later pay off with fatter Military are battling more than the enemy. Competing for valuable press attention that some believe can later pay off with fatter budget allocations in Congress. budget allocations in Congress. The Army with over 400 The Army with over 400 embedded journalists appears embedded journalists appears to have won the war. to have won the war.

19. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-19 Sales Promotion Internal & External Internal & External Sampling Sampling Word-Of-Mouth Word-Of-Mouth Viral Marketing/Swag Viral Marketing/Swag Technology Technology Testimonials Testimonials

20. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-20 Tips on Issuing Coupons Coupons can be used as a Thank you for buying or a Stop and try us. Coupons can be used as a Thank you for buying or a Stop and try us. The value must be enough to attract customers. The value must be enough to attract customers. Use coupon promotions sparingly. Use coupon promotions sparingly. Get professional help to get maximum exposure. Get professional help to get maximum exposure. Color-code your coupons for different groups that use them. Color-code your coupons for different groups that use them.

21. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-21 Celebrity Endorsers Celebrity Catherine Zeta Jones Kristie Alley Jason Alexander Britney Spears Geoffrey the Giraffe Product (s)

22. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-22 Push/Pull Push – personal selling to market a product to wholesalers & retailers Push – personal selling to market a product to wholesalers & retailers Pull – promote a product by generating consumer demand for it, primarily through advertising & sales promotions Pull – promote a product by generating consumer demand for it, primarily through advertising & sales promotions

23. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-23 Promotional Strategies Push Strategy Pull Strategy Promotion Distribution Retail Store Customer Promotion

24. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-24 Top Sports Endorsers AthleteLebron Kobe Bryant Micheal Jordan Tiger Woods Arnold Palmer Andre Agassi Endorsements $90.0 Million (2003) $47.0 Million (2002) $24.0 Million (2002) $63.0 Million (2003) $16.0 Million (2002) $14.0 Million (2002) Source: Source: Fortune Magazine

25. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-25 Hollywood as a Big Ad Miscellaneous Miscellaneous Reese Pieces in E.T. Reese Pieces in E.T. Red Stripe in The Firm Red Stripe in The Firm Accessories Accessories Ray-Ban Ray-Ban Charlies Angels Charlies Angels Men in Black Men in Black Fashion Fashion Grant, Dean, Kelly Grant, Dean, Kelly Sex and The City Sex and The City Legally Blonde 2 Legally Blonde 2 Stila, OPI nail polish, Stila, OPI nail polish, Reem Acra bridal gown Reem Acra bridal gown

26. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-26 Pricing Strategies Skimming Skimming Penetration Penetration

27. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-27 Breakeven Chart (Figure 14.9) Total Revenue or Total Cost Number of Units

28. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-28 Pricing Using Breakeven Analysis Problem Should we charge $2 or $3 per box? Costs Total Fixed Costs$400,000 Costs Total Fixed Costs$400,000 Variable Cost$ 1 per box Market Research Forecast Company can sell: 290,000 boxes at $2 @ 210,000 boxes at $3 @ 210,000 boxes at $3 @ Breakeven point = total fixed cost price - variable cost price - variable cost (per unit) (per unit) (per unit) (per unit) $2 price = $400,000 400,000 units to breakeven $2 - $1 $2 - $1 $3 price = $400,000 200,000 units to breakeven $3 - $1 BreakevenAnalysis

29. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-29 Market Share-Cable Source: Source: Wall Street Journal 1/12/2000

30. McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. 16-30 What They Cost When First Introduced 1927 Transatlantic Call$ 75/3 min. 1947Microwave Oven$ 3,000 1964FAX unit rental$ 850/month 1970Pocket Calculator$ 150 1974VCR Tape$ 50 Source: World Features Syndicate