1. Strategic Marketing 1. Imperatives for Market-Driven Strategy
2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control

2. Promotion, Advertising, and Sales Promotion Strategies
CHAPTER 12
Promotion, Advertising, and Sales Promotion Strategies
Promotion Strategy
Advertising Strategy
Sales Promotion Strategy
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

3. PROMOTION STRATEGY The Composition of Promotion Strategy
Developing Promotion Strategy
Communications Objectives
Deciding the Role of the Promotion Components
Determining the Promotion Budget
Promotion Component Strategies
Integrating and Implementing the Promotion Strategy
Effectiveness of Promotion Strategy

4. Promotion Strategy: planning, implementing, and
controlling an organization’s
communications to its customers
And other target audiences.

5. Composition of Promotion Strategy Interactive/Internet Marketing
Direct
Marketing
Advertising
Promotion
Components
Personal
Selling
Sales
Promotion
Public
Relations

6. U. S. Annual Expenditures (billions)
$200
$400
$600
Sales Promotion
Personal Selling
Advertising

7. Brand Advertising On-Line Has Taken Off
INTERNET FEATURE
Brand Advertising On-Line Has Taken Off
SEARCH WORKS
Google and Yahoo! Have demonstrated the power of the Web by using customers’ search queries to connect them with advertisers.
CUSTOMERS ARE ONLINE
More than half of American households have always-on Net connections. And the Web reaches millions at the office. The Big Three portals—Yahoo, AOL, and MSN—reach a combined 50 million a day–-twice the TV audience of a World Series game.
VIDEO ROCKS
The adoption of broadband, which can handle videos, lets advertisers put TV-like ads online. Longer spots by BMW and Adidas have reached cult status. As demand for video soars, portals sell choice slots in advance, much like TV’s up-front sales.
FEEDBACK IS INSTANT
Marketers and online publishers have tools to track an ad’s performance in real time allowing them to make quick adjustments if customers aren’t clicking. This turns the Net into a vast marketing lab. And as video grows, it becomes a test bed for TV ads.
CUSTOMERS LEAVE TRAILS
It was an empty promise during the dot-com days, but now advertisers have the technology to follow customers, click by click, and to hit them with relevant ads. The upshot? No wasted money peddling dog food to cat owners.
Source: Stephen Baker, “The On-Line Ad Surge,” BusinessWeek, November 22, 2004, 79.

8. DESIGNING THE PROMOTION STRATEGY
MARKET TARGETING AND POSITIONING STRATEGIES
COMMUNICATION
OBJECTIVES
ROLE OF PROMOTION
COMPONENTS
Advertising
Sales Promotion
Public Relations
Personal Selling
Direct Marketing
Interactive/ Internet Marketing
PROMOTION
BUDGET
Coordination
with Product,
Distribution,
and Price
Strategies
PROMOTION COMPONENT
STRATEGIES
INTEGRATE AND IMPLEMENT PROMOTION COMPONENT STRATEGIES
EVALUATE EFFECTIVENESS OF PROMOTION STRATEGY

9. Illustrative Communications Objectives
Need Recognition
Finding Buyers
Brand Building
Evaluation of Alternatives
Decision to Purchase
Customer Retention

10. Deciding the Role of the Promotion Components
Expected contribution for each of the promotion components.
Which communication objective(s) will be the responsibility of each component?
What part of the budget will go to each component?

11. Factors Guiding the Role Assigned to Each Component
Market Target(s)
Desired Positioning
Role of Promotion in Positioning
Product Characteristics
Stage of Life Cycle
Situation Specific Factors

12. Determining the Promotion Budget Follow the Competition
Objective and Task
All You Can Afford
Budgeting Approaches
Percent of Sales
Follow the Competition

13. Budgeting Methods Features Limitations Percent of Sales
Fixed percent of sales, often based on past expenditure patterns.
Comparative Parity
Budget is based largely upon what competition is doing.
Objective and Task
Set objectives and then determine tasks (and costs) necessary to meet the objectives.
Percent of Sales
The method is very arbitrary. Budget may be too high when sales are high and too low when sales are low.
Comparative Parity
Differences in marketing strategy may require different budget levels.
Objective and Task
The major issue in using this method is deciding the right objectives so measurement of results is important.

14. Integrating and Implementing Promotion Strategy
Avoiding fragmentation
Difficulty in evaluating productivity
Differences in priorities
Separate organizational units
Assigning integration responsibility

15. Illustrative Factors Affecting Promotion Strategy
Advertising/ sales promotion driven
Balanced
Personal selling driven
Number and dispersion of buyers
Buyers’ information needs
Size and importance of purchase
Distribution
Product Complexity
Post-purchase contact required
Small
High
Large
Direct
Yes
Low
Channel No

16. Promotion Strategy Issues
Expense/Response Relationships
Allocation
Impact on Brand Equity
Integration of Promotion Components
Effectiveness of the Strategy

17. Setting Objectives and Budgeting Creative Strategy
ADVERTISING STRATEGY
Setting Objectives and Budgeting
Creative Strategy
Media/Scheduling Decisions
Role of the Advertising Agency
Program Implementation and Measuring Effectiveness

18. The Internet is Shifting the Power Position to the Customer
How the Money is Spent is Changing.
The Amount Spent on Internet Advertising is a Small Fraction of the Total, but Very Powerful and Growth is Accelerating.
Consumers Spend 10 hrs/person/day with Media of all Kinds—How Much is Media Multi-Tasking?
Ad Spending Versus Consumers’ Time Allocations.
Advertising Agency Consolidation and Reorganization—the Big 4.
Do Companies Recognize the Revolutionary Implications of Newly Empowered Consumers?
The Internet Will be the Most Prominent Medium in the Lives of the Age Group.
Source: The Economist, “Crowned at Last: A Survey of Consumer Power,” April 2, 2005, 1-16.

19. Advertising Strategy Target Audience Advertising Objectives
Advertising Budget
Creative Strategy
Advertising Media and Programming Schedules
Evaluate the Effectiveness of the Strategy

20. Advertising Objectives
Expose communication to target audience
Create awareness
Change attitude(s)
Increase Sales
Generate profits

21. Alternative Levels for Setting Advertising Objectives
Increasing Uncertainty
About Impact on
Purchasing Behavior
Type of Objective
Exposure
Awareness
Attitude
Change
Sales
Profit
Increasing Difficulty
of Measurement

22. Budget Determination Media/ Scheduling Decisions Creative Strategy
OBJECTIVE AND TASK METHOD HAS THE MOST SUPPORT
Budget Determination
Media/ Scheduling Decisions
Creative Strategy

23. Inside the world’s biggest, most profitable luxury brand
The Vuitton Machine*
Inside the world’s biggest, most profitable luxury brand
BENCHMARKING VUITTON
Brand Sales Percent Operating
Billions Change* Margin
Louis Vuitton $ % %
Prada
Gucci**
Hermès
Coach
*At constant rate of exchange **Gucci division of Gucci Group Data: Company reports. BW
Vuitton increased advertising 20% in 2003—spends only 5% of revenues on advertising—about half the industry average
*BusinessWeek, March 22, 2004,

24. CREATIVE STRATEGY Product Distribution Price Promotion Advertising
The creative strategy is guided by the market target and the positioning strategy.
Product
Distribution
Price
Promotion
Advertising
(How to communicate intended positioning to buyers and others influencing the purchase.)
Provide a unifying concept that binds together the various parts of the advertising campaign.
Creative Strategy

25. Media/Scheduling Decision
Television
Radio
Magazines
Online
Website
Outdoor

26. Relative access to the target audience
Favorable zone
Unfavorable zone
Relative cost of reaching the target group(s)

27. Advertising Agencies in Perspective
Fast change has come to the advertising industry.
Huge, integrated agencies face a challenging future.
Do clients want a full-service agency?
The business model is in need of change.
The basis of compensation continues to be debated and altered.
Specialists (e.g. media buying services) are being used.
Importantly, the core of the creative process is the agency.
Several methods are available to evaluate advertising results.

28. Role of the Advertising Agency
Target Audience
Advertising Objectives
Advertising Budget
Creative Strategy
Advertising Agency
Advertising Media and Programming
Evaluate the Effectiveness of the Strategy

29. Advertising Strategy Implementation and Effectiveness
Decide how to measure effectiveness before implementing the strategy.
Assign responsibility for tracking performance.
Assessing the quality of advertising is important.
Exposure to advertising is not a very sensitive measure of effectiveness.
Several methods are available to evaluate
advertising results.

30. MEASURING ADVERTISING EFFECTIVENESS
Rating
Services
Sales and
Expense Analysis
Test
Marketing
MEASURING
ADVERTISING
EFFECTIVENESS
Controlled
Tests
Recall
Tests

31. SALES PROMOTION STRATEGY
consists of various incentives, mostly short term, intended to stimulate quicker and/or greater purchase of particular goods/services by consumers or the trade.

32. The Realities of Mail-in Rebates
STRATEGY FEATURE
The Realities of Mail-in Rebates
Consumers hate the hassles, companies love unredeemed rebates, and regulators are investigating the consumer complaints.
As much as 40% of rebates never get redeemed.
Some 400 million rebates are offered each year with a total value of $6 billion.
Unclaimed rebates translate into more than $2 billion of extra revenue for retailers and their suppliers each year.
Complex filing rules and long delays discourage consumers.
Companies emphasize the filing processes are intended to discourage fraud.
The largest rebate processor monitors 10,000 addresses suspected of submitting bogus rebates.
Rebates offer companies an opportunity to promote small discounts without marking the products down.
Rebates have become very popular with computer and consumer-electronics companies.

33. The value of rebates has also increased.
Regulators are intensifying their scrutiny of the companies offering rebates.
The developing back-lash against rebates is pushing some companies to halt rebate strategies.
Others are encouraging online filing.
Fulfillment houses are revising their processing systems, using computer technology to validate claims.
Consumers would like mail-in rebates to go away but want the best price they can get.
Source: Brian Grow, “The Great Rebate Runaround,” BusinessWeek, December 5, 2005, 34, 36, and 37.

34. Sales Promotion Activities and Targets
Activities include trade shows, specialty advertising, contests, displays, coupons, recognition programs, and free samples.
SALES
PROMOTION
TARGETS
Consumer
Buyers
Salespeople
Business
Buyers
Value Chain