PROMOTION COMMUNICATION 4 Steps to Marketing Strategy The Marketing Mix and PROMOTION The Role of Promotion • Promotion – Communication to build and maintain relationships by informing and persuading one or more audiences – Overall role of promotion is to stimulate demand by • building and enhancing customer relationships. • focusing customers on information about company activities and products. • promoting programs that help selected groups to build goodwill. • sponsoring special events that generate positive promotion of an organization and its brands. Which tool and technique to use? “What do we want to accomplish?” Information Flows Are Important in Integrated Marketing Communications Integrated Marketing Communications • Integrated Marketing Communications – Coordination of promotion and other marketing efforts for maximum informational and persuasive effect – Major goal is to send a consistent message to customers The Communication Process Promotion and the Communication Process: Key Terms • Communication – A sharing of meaning; the transmission of information – Source is a person, group, or organization with a meaning it tries to share with an audience – Receiver is an individual, group, or organization that decodes a coded message – Coding process (encoding) is the converting meaning into a series of signs or symbols – Medium of transmission is the the means of carrying the coded message from the source to the receiver – Decoding process is the conversion of signs or symbols into concepts and ideas – Noise is anything which reduces a communication’s clarity and accuracy – Feedback is the receiver’s response to a message – Channel capacity is the limit on the volume of information a communication channel can handle effectively GOALS OF PROMOTION: Push and Pull Channel Policies • Push Policy – Promoting a product only to the next institution down the marketing channel • Pull Policy – Promoting a product directly to consumers to develop stronger consumer demand that pulls products through the marketing channel Comparison of Push and Pull Promotional Strategies Advertising – A paid nonpersonal communication about an organization and its products transmitted to a target audience through mass media – Benefits • Extremely cost efficient (cost per person) in reaching a large audience • Repeatable several times and in several media markets • Adds value to a product and enhances a firm’s image Major Decisions in Advertising Major Decisions in Advertising MEDIA: • Newspapers • Television • Radio • Magazines • Outdoor • Indoor • internet Personal Selling It’s effective . . . but expensive A paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation – Advantages • Is a more specific form of advertising • Has greater impact on consumers • Provides immediate feedback (kinesic, proxemic, and tactile communications) – Limitations • Is an expensive form of advertising • Is labor intensive and time consuming • Relationship marketing is focused on mutual benefit and the long term Possible Ways to Organize the Sales Force Motivating the Sales Force • Surprise! Money works, also promotion, accomplishment • Recognition (Salesperson of the month) and liking don’t work as well • Most firms develop quotas – Warning, there are always unintended consequences • Supplemental rewards (often travel) are typical Sales Promotion A “Necessary Evil” for Mature Products, and often useful to “induce trial” for new products “Advertising” is a small part of promo expenditure Sales Promotion, pro and con • A “necessary evil” in product maturity • May give customers a “reason to buy” • It works: Discounts do drive sales • Erodes current quarter profitability • May erode reference price • May accelerate purchases from future periods to now Types of Consumer Sales Promotion Activities • Coupons • Price disconts (cents off) • Buy this, get that packs • 25 percent more free • Contests – Consumer • Premiums • Samples – Free use in B2B • Loyalty rewards Types of Trade Sales Promotion Activities • Temporary price reduction • Increased margin • Trade deals “buy 6 ship 8” • Annual sales volume rewards – Be careful about anti-trust • Contests (sales force) Public Relations Communications with the firm’s publics that are not “mass media paid advertising” or “direct promotion” – A broad set of communication efforts used to create and maintain favorable relationships between the organization and its stakeholders – Publicity is a nonpersonal communication in a news story form about an organization or its products, or both, transmitted through a mass medium for free Public Relations Activities Event Sponsorship Possibilities Product Placement Possibilities Direct Promotion When we know the target by name or address (including e-mail) Comments on “Media” • This is why you have an promo agency: • Pros and cons of each medium – Reach, Impact, Frequency, Cost (the metric is CPM: Cost per Thousand impressions) • Are you aiming for awareness, interest, trial or repeat behavior? How to think about the Internet • Both a medium for advertising, and a channel of distribution (“order on-line”) • The great advantage of the Internet is that it permits context-based advertising (when you search for “Caribbean Cruise” Google shows you links to Disney Cruise Line and Expedia) Media terminology • Timing – All at once, or “flights” or “even” – Reach (the percent of our target who will see) – Impact • Credibility • Image • “Impressions” • (number of times target sees your ad) – Conventional wisdom is that response peaks after 7 impressions Message Decisions • What point are we trying to get across? – “Now with more fiber” – “Half the price of our competitor’s offer” • The “brand essence statement” should drive this, followed by the specific promotional goal (e.g. “Induce brand switching from brand-y to us”)