1. Chapter 8: Marketing Communications and Pricing 1 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Integrated Marketing Communications and Pricing Strategies It Pays to Advertise!

2. Chapter 8: Marketing Communications and Pricing 2 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Developing a Marketing Communications Plan Step 1: Create specific, measurable objectives. Step 1: Create specific, measurable objectives. Step 2: Identify and analyze the target audience. Step 2: Identify and analyze the target audience. Step 3: Design an advertising message and choose the media for transmitting it. Step 3: Design an advertising message and choose the media for transmitting it.

3. Chapter 8: Marketing Communications and Pricing 3 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Build Ads Around a Unique Selling Proposition (USP) USP - A key customer benefit of a product or service that answers the critical question that every customer asks: “What's in it for me?” USP - A key customer benefit of a product or service that answers the critical question that every customer asks: “What's in it for me?” Identify your product or service's USP by describing the primary benefit it offers customers and then list other secondary benefits it provides. Identify your product or service's USP by describing the primary benefit it offers customers and then list other secondary benefits it provides.

4. Chapter 8: Marketing Communications and Pricing 4 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Build Ads Around a Unique Selling Proposition (USP) (continued) Don’t overlook the intangible or psychological benefits your product or service offers. Don’t overlook the intangible or psychological benefits your product or service offers. Briefly list a few facts that support this USP. Briefly list a few facts that support this USP. Then, focus your ads to stress these top benefits and the facts supporting them! Then, focus your ads to stress these top benefits and the facts supporting them!

5. Chapter 8: Marketing Communications and Pricing 5 Copyright 2005 Prentice Hall Inc. A Pearson Education Company A Six-Sentence Advertising Strategy What is the purpose of this ad? What is the purpose of this ad? What USP can you offer customers? What USP can you offer customers? What other key benefits support your USP? What other key benefits support your USP? At whom are you aiming the ad? At whom are you aiming the ad? What response do you want from your target audience? What response do you want from your target audience? What image do you want to convey in your ads? What image do you want to convey in your ads?

6. Five Fundamentals of a Successful Advertisement. It should attract attention. It should emphasize a key benefit of the product or service to the customer. It should communicate the company’s Unique Selling Proposition (USP). It should prove the USP and benefits to the customer with facts, statistics, or testimonials. It should motivate customers to take action immediately. Source: Adapted from Jerry Fisher, “Fine Print,” Entrepreneur, November 1994, pp. 145- 147.

7. Chapter 8: Marketing Communications and Pricing 7 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Can Your Ad Pass These 7 Tests? Scan test Scan test Comprehension test Comprehension test Differentiation test Differentiation test Puffery test Puffery test Believability test Believability test Immediate clarity test Immediate clarity test USP test USP test Click Here For Details

8. Chapter 8: Marketing Communications and Pricing 8 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Promotion Includes… Publicity - any commercial news covered by the media that boosts sales but for which the small business does not pay. Publicity - any commercial news covered by the media that boosts sales but for which the small business does not pay. Personal selling - the personal contact between sales personnel and potential customers resulting from sales efforts. Personal selling - the personal contact between sales personnel and potential customers resulting from sales efforts. Advertising - any sales presentation that is nonpersonal in nature and is paid for by an identified sponsor. Advertising - any sales presentation that is nonpersonal in nature and is paid for by an identified sponsor.

9. Chapter 8: Marketing Communications and Pricing 9 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Tips for Stimulating Publicity Write an article of interest to customers. Write an article of interest to customers. Sponsor an off-beat event. Sponsor an off-beat event. Involve celebrities “on the cheap.” Involve celebrities “on the cheap.” Offer to be interviewed on TV and radio stations. Offer to be interviewed on TV and radio stations. Publish a newsletter. Publish a newsletter. Speak to local organizations. Speak to local organizations. Sponsor a seminar. Sponsor a seminar. Write news releases and fax or e-mail them to the media. Write news releases and fax or e-mail them to the media. Serve on community and industry boards and committees. Serve on community and industry boards and committees. Sponsor a community project or support a nonprofit organization. Sponsor a community project or support a nonprofit organization. Promote a cause. Promote a cause.

10. Chapter 8: Marketing Communications and Pricing 10 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Sponsorships and Special Events Sponsoring special events generates publicity, attracts interest, and provides a lasting impression of a company in customers’ minds. Sponsoring special events generates publicity, attracts interest, and provides a lasting impression of a company in customers’ minds. North American companies spend $7 billion a year on sponsorships. North American companies spend $7 billion a year on sponsorships. Small companies can create their own special events. Small companies can create their own special events.

11. Chapter 8: Marketing Communications and Pricing 11 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Tips for Sponsoring an Event Don’t count on sponsorships for your entire advertising campaign. Don’t count on sponsorships for your entire advertising campaign. Look for or create an event that is appropriate for your business. Look for or create an event that is appropriate for your business. Research the event and the organization hosting it before agreeing to become a sponsor. Research the event and the organization hosting it before agreeing to become a sponsor.

12. Chapter 8: Marketing Communications and Pricing 12 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Tips for Sponsoring an Event (continued) Try to become the dominant (or ideally, the only) sponsor of the event. Try to become the dominant (or ideally, the only) sponsor of the event. Clarify the costs and the level of participation required for sponsorship up front. Clarify the costs and the level of participation required for sponsorship up front. Get involved; take an active role in the event. Get involved; take an active role in the event.

13. Chapter 8: Marketing Communications and Pricing 13 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Top Salespeople… Are enthusiastic and alert to new opportunities. Are enthusiastic and alert to new opportunities. Are experts in the products and services they sell. Are experts in the products and services they sell. Concentrate on select accounts. Concentrate on select accounts. Plan thoroughly. Plan thoroughly. Use a direct approach. Use a direct approach.

14. Chapter 8: Marketing Communications and Pricing 14 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Top Salespeople… Work from the customer’s perspective. Work from the customer’s perspective. Use past success stories. Use past success stories. Leave sales material with clients. Leave sales material with clients. See themselves as problem solvers, not just vendors. See themselves as problem solvers, not just vendors. Measure their success not just by sales volume but by customer satisfaction. Measure their success not just by sales volume but by customer satisfaction. (continued)

15. Chapter 8: Marketing Communications and Pricing 15 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Successful Personal Selling Requires a Selling System Create trust and respect - Establish rapport with prospect. Create trust and respect - Establish rapport with prospect. Interview the prospect - Let the prospect talk to determine the key criteria that influence the buying decision. Interview the prospect - Let the prospect talk to determine the key criteria that influence the buying decision. Demonstrate, explain, and show – Make clear the benefits of your product or service. Demonstrate, explain, and show – Make clear the benefits of your product or service.

16. Chapter 8: Marketing Communications and Pricing 16 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Successful Personal Selling Requires a Selling System Validate - Prove the claims about your product or service. Validate - Prove the claims about your product or service. Overcome objections- Listen for objections and try to overcome them. Overcome objections- Listen for objections and try to overcome them. Close - Stop talking and ask for the order. Close - Stop talking and ask for the order. (continued)

17. Chapter 8: Marketing Communications and Pricing 17 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Selecting Advertising Media: Key Questions How large is my firm's trading area? How large is my firm's trading area? Who are my customers and what are their characteristics? Who are my customers and what are their characteristics? Which media are my target customers most likely to watch, listen to, or read? Which media are my target customers most likely to watch, listen to, or read? What budget limitations do I face? What budget limitations do I face?

18. Chapter 8: Marketing Communications and Pricing 18 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Selecting Advertising Media: Key Questions Which media do my competitors use? Which media do my competitors use? How important are repetition and continuity of my advertising message? How important are repetition and continuity of my advertising message? How does each medium compare with others in its audience, its reach, and its frequency? How does each medium compare with others in its audience, its reach, and its frequency? What does the advertising medium cost? What does the advertising medium cost?  Absolute cost  Relative cost (continued)

19. Chapter 8: Marketing Communications and Pricing 19 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Advertising Media Options Outdoor ads Outdoor ads Transit advertising Transit advertising Directories Directories Trade shows Trade shows Specialty advertising Specialty advertising Point-of-purchase ads Point-of-purchase ads n Word-of-Mouth n Newspapers n Radio n Television n Magazines n Direct mail n World Wide Web

21. Chapter 8: Marketing Communications and Pricing 21 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Newspapers Advantages Advantages  Selected geographic coverage  Flexibility  Timeliness  Communication potential  Low cost  Prompt responses

22. Chapter 8: Marketing Communications and Pricing 22 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Newspapers (continued) Disadvantages Disadvantages  Wasted readership  Reproduction limitations  Lack of prominence  Declining readership  Short ad life

23. Chapter 8: Marketing Communications and Pricing 23 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Radio Advantages Advantages  Universal infiltration  Market segmentation  Flexibility and timeliness  Friendliness Disadvantages Disadvantages  Poor listening  Need for repetition  Limited message

24. Chapter 8: Marketing Communications and Pricing 24 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Snappy Radio Copy Should.... Stress benefits to the listener. Stress benefits to the listener. Use attention-getters. Use attention-getters. Zero in on a particular audience. Zero in on a particular audience. Be simple and to the point. Be simple and to the point. Sell early and often. Sell early and often. Be written for the ear. Be written for the ear. Be rehearsed before presentation. Be rehearsed before presentation. Use positive action words. Use positive action words. Put the listener in the picture. Put the listener in the picture. Mention the advertiser often. Mention the advertiser often. Focus on getting a response. Focus on getting a response.

25. Chapter 8: Marketing Communications and Pricing 25 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Television Advantages Advantages  Broad coverage  Visual advantage  Flexibility  Design and production assistance

26. Chapter 8: Marketing Communications and Pricing 26 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Television (continued) Disadvantages Disadvantages  Brief exposure  Clutter  Zapping  Fragmented audience  Costs

27. Chapter 8: Marketing Communications and Pricing 27 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Creative Television Ads Keep it simple. Keep it simple. Have one basic idea. Have one basic idea. Make your point clear. Make your point clear. Make it unique. Make it unique. Get viewers’ attention. Get viewers’ attention. Involve the viewer. Involve the viewer. Use emotion. Use emotion. Consider production values. Consider production values. Prove your product’s or service’s benefit. Prove your product’s or service’s benefit. Identify your company well and often. Identify your company well and often.

28. Chapter 8: Marketing Communications and Pricing 28 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Magazines Advantages Advantages  Long life spans  Multiple readership  Target marketing  Ad quality Disadvantages Disadvantages  Cost  Long closing times  Lack of prominence

29. Chapter 8: Marketing Communications and Pricing 29 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Direct Mail Advantages Advantages  Selectivity  Flexibility  Reader attention  Rapid feedback  Measurable results and testable strategies  Effectiveness

30. Chapter 8: Marketing Communications and Pricing 30 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Direct Mail (continued) Disadvantages Disadvantages  Inaccurate mailing lists  Clutter  High relative costs  High throwaway rate

31. Chapter 8: Marketing Communications and Pricing 31 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Creating Direct Mail Ads That Really Work Promise benefits in the headline. Promise benefits in the headline. Use short “action” words. Use short “action” words. Use lots of white space. Use lots of white space. Use eye-catching words. Use eye-catching words. Forget grammatical rules. Forget grammatical rules. Repeat the offer at least three times. Repeat the offer at least three times. Offer proof of claims and endorsements. Offer proof of claims and endorsements. Ask for the order. Ask for the order.

32. Chapter 8: Marketing Communications and Pricing 32 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Creating Direct Mail Ads That Really Work Ask the reader questions in the copy. Ask the reader questions in the copy. Use high-quality paper and envelopes. Use high-quality paper and envelopes. People usually open envelopes that resemble bills. People usually open envelopes that resemble bills. Address envelopes to a particular person. Address envelopes to a particular person. Use stamps if possible. Use stamps if possible. Use a “P.S.” because recipients almost always read them. Use a “P.S.” because recipients almost always read them. Make the order form easy to fill out. Make the order form easy to fill out. (continued)

33. Chapter 8: Marketing Communications and Pricing 33 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Advertising on the Web Banner ads Banner ads Pop-up ads Pop-up ads Cookies Cookies Full-page ads Full-page ads Push technology ads Push technology ads E-mail ads E-mail ads  Permission e-mail  Spam

34. Chapter 8: Marketing Communications and Pricing 34 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Outdoor Advertising Advantages Advantages  High exposure  Broad reach  Flexibility  Cost efficiency Disadvantages Disadvantages  Brief exposure  Limited ad recall  Legal restrictions  Lack of prominence

35. Chapter 8: Marketing Communications and Pricing 35 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Transit Advertising Advantages Advantages  Wide coverage  Repeat exposure  Low cost  Flexibility Disadvantages Disadvantages  Generality  Limited appeal  Brief message

36. Chapter 8: Marketing Communications and Pricing 36 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Directories Advantages Advantages  Prime prospects  Long life Disadvantages Disadvantages  Lack of flexibility  Ad clutter  Obsolescence

37. Chapter 8: Marketing Communications and Pricing 37 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Trade Shows Advantages Advantages  Natural market  Pre-selected audience  New customer market  Cost advantage Disadvantages Disadvantages  Increasing costs  Wasted effort

38. Chapter 8: Marketing Communications and Pricing 38 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Specialty Advertising Advantages Advantages  Reaching selected audiences  Personalized nature  Versatility Disadvantages Disadvantages  Potential for waste  Costs

39. Chapter 8: Marketing Communications and Pricing 39 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Preparing An Advertising Budget What is affordable What is affordable Matching competitor's advertising expenditures Matching competitor's advertising expenditures Percentage of Sales Percentage of Sales  Past Sales  Forecasted Sales Objective-and-Task Objective-and-Task

40. Chapter 8: Marketing Communications and Pricing 40 Copyright 2005 Prentice Hall Inc. A Pearson Education Company How To Advertise “Big” On A Small Budget Take advantage of cooperative advertising. Take advantage of cooperative advertising. Consider shared advertising. Consider shared advertising. Repeat ads that have been successful. Repeat ads that have been successful. Use identical ads in different media. Use identical ads in different media.

41. Chapter 8: Marketing Communications and Pricing 41 Copyright 2005 Prentice Hall Inc. A Pearson Education Company How To Advertise “Big” On A Small Budget (continued) Hire independent copywriters and artists. Hire independent copywriters and artists. Concentrate advertising when customers are most likely to buy. Concentrate advertising when customers are most likely to buy. Maximize publicity with techniques such as cause marketing. Maximize publicity with techniques such as cause marketing.

42. What determines price? Price Ceiling ("What will the market bear?") Price Floor ("What are the company's costs?") Acceptable Price Price Range Range ? ? ? ? ? ? ? ? ? ? ? Final Price (What is the company's desired "image?") Final Price (What is the company's desired "image?") ?

43. Chapter 8: Marketing Communications and Pricing 43 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Introducing A New Product 3 Basic Strategies: Penetration Penetration Skimming Skimming Sliding-down-the-demand-curve Sliding-down-the-demand-curve 3 Goals: Getting the product accepted Getting the product accepted Maintaining market share as competition grows Maintaining market share as competition grows Earning a profit Earning a profit

44. Chapter 8: Marketing Communications and Pricing 44 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Pricing Techniques Odd pricing Odd pricing Price lining Price lining Leader pricing Leader pricing Geographical pricing Geographical pricing Opportunistic pricing Opportunistic pricing Discounts Discounts Suggested retail prices Suggested retail prices

45. Chapter 8: Marketing Communications and Pricing 45 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Pricing for Retailers: Markup Dollar Markup = Retail Price - Cost of Merchandise Percentage (of Retail Price) Markup = Dollar Markup Retail Price Percentage (of Cost) Markup = Dollar Markup Cost of Unit Example: Dollar Markup = $25 - $15 = $10 Percentage (of Retail Price) Markup = $10 $25 = 40% Percentage (of Cost) Markup = $10 $15 = 67%

46. Chapter 8: Marketing Communications and Pricing 46 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Pricing for Manufacturers: Breakeven Selling Price BreakevenSellingPriceQuantity = Profit Variable cost per unit produced Total fixed costs Total fixed costs + { { x } } + Quantity produced

47. Chapter 8: Marketing Communications and Pricing 47 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Pricing for Manufacturers: Breakeven Selling Price Breakeve n SellingPrice Quantit y Example : = Profi t Variable cost per unit produce d Total fixed costs Total fixed costs + { { x } } + Quantity produced Breakeve n SellingPrice = $0$0$0$0 6.98/unit 50,000 unit $110,000 $110,000 + { x } + 50,000 units = $9.18 per unit

48. Chapter 8: Marketing Communications and Pricing 48 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Pricing for Service Firms: Price per Hour Price per Hour = Total cost per x 1 productive hour (1 - net profit target as productive hour (1 - net profit target as a % of sales) a % of sales) Example: Ned’s TV Repair Shop Price per Hour = $13.44 per x 1 hour (1 -.18) hour (1 -.18) = $16.38 per hour

49. Chapter 8: Marketing Communications and Pricing 49 Copyright 2005 Prentice Hall Inc. A Pearson Education Company Consumer Credit Credit cards Credit cards  National  Private Installment credit Installment credit Trade credit Trade credit