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ChapterChapter 99

Promotional StrategyPromotional Strategy

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Chapter OutlineChapter Outline

The Role of Promotion in Business MarketingThe Role of Promotion in Business Marketing Setting Objectives for a Promotional PlanSetting Objectives for a Promotional Plan Developing the Promotional BudgetDeveloping the Promotional Budget Developing and Implementing the Promotional Developing and Implementing the Promotional

MixMix Measuring the Effectiveness of the Business Measuring the Effectiveness of the Business

Promotion CampaignPromotion Campaign Following Up and Making Necessary ChangesFollowing Up and Making Necessary Changes

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Marketing Mix = Product, Price, Promotion, Place

Advertising, publicity, and sales promotion are communication methods used by marketers to remind or persuade current and potential customers… In the business market, advertising, publicity, and sales promotion pave the way for the sales call.

Business promotion = the use of seller-generated promotional tools to deliver messages to business markets.

The Role of Promotion in Business The Role of Promotion in Business MarketingMarketing

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Insert Exhibit 9-1 here (it is similar to but different from the Figure in the 2nd edition

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Promotion Mix = Professional selling, Advertising, Public relations, Sales promotion, and Direct marketing

Integrated marketing communications (IMC) – the coordination of the promotional mix elements along with other marketing activities such that all communication with the firm’s customers is consistent

Promotional campaign – a sequence of promotions reflecting a common theme and geared to specific objectives.

The Role of Promotion in Business The Role of Promotion in Business MarketingMarketing

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Setting Objectives for a Setting Objectives for a Promotional PlanPromotional Plan

Communication objectives Communication objectives • Building product awarenessBuilding product awareness• Inducing trial and/or retrial of new productsInducing trial and/or retrial of new products• Countering competitors’ offeringsCountering competitors’ offerings• Building product-line acceptanceBuilding product-line acceptance• Obtaining space with distributorsObtaining space with distributors• Intensifying usageIntensifying usage• Aiding the sales staffAiding the sales staff• Reviving a brandReviving a brand• Confirming buyers’ purchase decisionsConfirming buyers’ purchase decisions

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Setting Objectives for a Setting Objectives for a Promotional PlanPromotional Plan

Sales objectives Sales objectives • Increasing market shareIncreasing market share• Stimulating short-term salesStimulating short-term sales• Sustaining product preferenceSustaining product preference

Effective promotion helps sales; ineffective promotion can waste money and even damage company image.

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Developing the Promotional BudgetDeveloping the Promotional Budget

Percentage of anticipated salesPercentage of anticipated sales Affordable/Arbitrary (most common)Affordable/Arbitrary (most common) Competitive parity/Market shareCompetitive parity/Market share Objective-and-task (most common)Objective-and-task (most common)

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business AdvertisingBusiness Advertising• Goals of Business AdvertisingGoals of Business Advertising

To make current or potential customers aware of To make current or potential customers aware of the marketer’s firm.the marketer’s firm.

To convey information about the characteristics of To convey information about the characteristics of a particular product or products manufactured by a particular product or products manufactured by the marketer’s firm.the marketer’s firm.

To ease the salesperson’s job.To ease the salesperson’s job. To reduce overall selling costs.To reduce overall selling costs.

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

A good ad often is similar to a sales callA good ad often is similar to a sales call• Opener (headline) to catch interestOpener (headline) to catch interest• Body to convey information and benefitsBody to convey information and benefits• Call for action to closeCall for action to close

Ad’s connection to customer’s buying and adoption process should Ad’s connection to customer’s buying and adoption process should be clear.be clear.

A good ad:A good ad:• Is memorableIs memorable• Is consistent with company’s imageIs consistent with company’s image• Interests the right target audienceInterests the right target audience• Is easy to readIs easy to read• Provides evidence of customer valueProvides evidence of customer value• Motivates reader to want to learn moreMotivates reader to want to learn more

• Provides easy way for reader to learn moreProvides easy way for reader to learn more

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business AdvertisingBusiness Advertising• Media Selection (media mix)Media Selection (media mix)• Print MediaPrint Media

Horizontal publications, Horizontal publications, e.g., e.g., Design Engineering, Design Engineering, PurchasingPurchasing

Vertical publications, Vertical publications, e.g., e.g., Chemical Industry News, Chemical Industry News, Mechanical ContractorMechanical Contractor

Professional publications, Professional publications, e.g., Architectural Digest, e.g., Architectural Digest, Dental TechnologyDental Technology

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business AdvertisingBusiness Advertising• Media Selection (media mix)Media Selection (media mix)• Print Media Print Media (continued)(continued)

Industrial trade directories, Industrial trade directories, e.g., e.g., Thomas Register of Thomas Register of American ManufacturersAmerican Manufacturers

General business publications, General business publications, e.g., e.g., Fortune, Fortune, Business WeekBusiness Week

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business Advertising Business Advertising (continued)(continued)

• Broadcast MediaBroadcast Media• Business Advertising ContentBusiness Advertising Content• Use of Advertising AgenciesUse of Advertising Agencies

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Broadcast MediaBroadcast Media Radio and TV are sometimes used where market is highly Radio and TV are sometimes used where market is highly

geographically concentrated and product is of interest to geographically concentrated and product is of interest to broad range of business users.broad range of business users.• A roller bearing company in Ohio may use radio ads during A roller bearing company in Ohio may use radio ads during

morning commute in highly industrialized city to reach buying morning commute in highly industrialized city to reach buying center influencers in local industries where roller bearings are center influencers in local industries where roller bearings are used.used.

• IBM, Hewlett-Packard, Xerox, or FedEx may use TV spot during IBM, Hewlett-Packard, Xerox, or FedEx may use TV spot during “Dilbert,” which is watched by professionals from a wide range of “Dilbert,” which is watched by professionals from a wide range of industries, i.e., potential customers.industries, i.e., potential customers.

Broadcast media would not be likely vehicle if products Broadcast media would not be likely vehicle if products were only used by a few companies in target area (which were only used by a few companies in target area (which is often the case).is often the case).

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Advertising AgenciesAdvertising Agencies Advertising agencies Advertising agencies work on advertising strategy and work on advertising strategy and

campaigns, prepare copy and layouts, study markets, campaigns, prepare copy and layouts, study markets, select media, and carry out actual physical production select media, and carry out actual physical production of advertisement and its placement in selected media. of advertisement and its placement in selected media.

AgenciesAgencies do not alwaysdo not always understand technology and understand technology and particular buying process in business markets. Even particular buying process in business markets. Even when using advertising professionals, marketer must when using advertising professionals, marketer must assure ad strategy and content is appropriate and assure ad strategy and content is appropriate and effective. How can you do that?effective. How can you do that?

(continued)

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Advertising AgenciesAdvertising Agencies

When using an agency, marketer is responsible for:When using an agency, marketer is responsible for:

• Creating and measuring ad and campaign objectives.Creating and measuring ad and campaign objectives.

• Understanding target market’s adoption process.Understanding target market’s adoption process.

• Understanding how ad campaign fits into integrated Understanding how ad campaign fits into integrated promotion mix that moves potential buyer through each step promotion mix that moves potential buyer through each step in adoption process and supports continued customer in adoption process and supports continued customer satisfaction and repurchase.satisfaction and repurchase.

• Testing ads.Testing ads.

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Advertising AgenciesAdvertising Agencies

Many business marketers don’t formally test advertising Many business marketers don’t formally test advertising effectiveness (as strange as that may seem!).effectiveness (as strange as that may seem!).

Agencies are paid for their ad production costs, plus a Agencies are paid for their ad production costs, plus a percentage (~15%) of every media placement. If a marketer percentage (~15%) of every media placement. If a marketer relies on the agency to recommend placements, there may be a relies on the agency to recommend placements, there may be a conflict of interest.conflict of interest.

Some marketers are asking agencies to accept payment based Some marketers are asking agencies to accept payment based on ad and campaign performance (pre- and posttesting). on ad and campaign performance (pre- and posttesting). Agencies are resisting.Agencies are resisting.

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business PublicityBusiness Publicity• Publicity can:Publicity can:

Help build or add to company’s visibility or image.Help build or add to company’s visibility or image. Introduce a new product, service, or improvement.Introduce a new product, service, or improvement. Provide salespeople with easier entry into office of current Provide salespeople with easier entry into office of current

or prospective customers.or prospective customers.

(continued)

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business PublicityBusiness Publicity• Good publicity doesn’t just happen; it is managed. PR Good publicity doesn’t just happen; it is managed. PR

department will create relationships with appropriate department will create relationships with appropriate media representatives and provide them with media representatives and provide them with newsworthy information presented from the company’s newsworthy information presented from the company’s perspective. If all goes well, that is how it will appear.perspective. If all goes well, that is how it will appear.

• Because media are not paid to present publicity, there Because media are not paid to present publicity, there is little control over how it is presented. Marketers tend is little control over how it is presented. Marketers tend to have more influence with media outlets they to have more influence with media outlets they regularly use to advertise.regularly use to advertise.

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business PublicityBusiness Publicity• Techniques for getting in the news:Techniques for getting in the news:

Press releasesPress releases Exclusive featuresExclusive features Press conferencesPress conferences Press kitsPress kits

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Business Publicity (Example)Business Publicity (Example)In a recent example of the lack of control over publicity, a In a recent example of the lack of control over publicity, a university put out a news release concerning the student university put out a news release concerning the student government’s new honor code. Acting on their own, the students government’s new honor code. Acting on their own, the students created a set of honor standards and administration plan that are created a set of honor standards and administration plan that are among the most rigorous in the nation. As a final step in the among the most rigorous in the nation. As a final step in the process, the faculty voted their support of the code. process, the faculty voted their support of the code.

The news item was picked up by the region’s leading paper which The news item was picked up by the region’s leading paper which ran the story under the bold headline:ran the story under the bold headline:

University Faculty Approves Cheating PlanUniversity Faculty Approves Cheating Plan

At best, the headline is poorly worded.At best, the headline is poorly worded.

(continued)

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Business Publicity (Example)Business Publicity (Example)

Roger E. Axtell, a past Vice President of Marketing for the Parker Pen Roger E. Axtell, a past Vice President of Marketing for the Parker Pen Company tells of one his first assignments with the company. He sent Company tells of one his first assignments with the company. He sent out a news release announcing a new company president and out a news release announcing a new company president and management team. The newspaper ran the item with the new management team. The newspaper ran the item with the new management team’s pictures by the side of the article. Unfortunately, management team’s pictures by the side of the article. Unfortunately, directly under the pictures the newspaper had placed an unrelated article directly under the pictures the newspaper had placed an unrelated article with the headline: with the headline:

Local Men Arrested in Pig TheftLocal Men Arrested in Pig Theft

Getting free publicity is nice, but it leaves you at mercy of Getting free publicity is nice, but it leaves you at mercy of poor placements, poor wording, or intentional negative spin. poor placements, poor wording, or intentional negative spin. Use it with caution.Use it with caution.

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business Sales PromotionBusiness Sales Promotion• Trade Shows and ExhibitsTrade Shows and Exhibits• Types of Trade ShowsTypes of Trade Shows• Deciding Whether to ParticipateDeciding Whether to Participate• Trade Show BudgetingTrade Show Budgeting• Contests, Sweepstakes, and GamesContests, Sweepstakes, and Games• Advertising SpecialtiesAdvertising Specialties

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Trade Shows and ExhibitsTrade Shows and Exhibits

Trade shows are often large component of total business Trade shows are often large component of total business marketing promotion budget allocation (behind personal marketing promotion budget allocation (behind personal selling and, possibly, trade journal advertising).selling and, possibly, trade journal advertising).

Trade shows (large and small, industry-specific and Trade shows (large and small, industry-specific and general) are regularly scheduled in cities all across the general) are regularly scheduled in cities all across the world.world.

COMDEX, the U.S. computer industry trade show, brings COMDEX, the U.S. computer industry trade show, brings together 2,200+ companies and 220,000 attendees.together 2,200+ companies and 220,000 attendees.

(continued)

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Trade Shows and ExhibitsTrade Shows and Exhibits Like all marketing expenditures, trade shows need to have measurable Like all marketing expenditures, trade shows need to have measurable

objectives and a budget.objectives and a budget. Using your business judgment, estimate the costs for a company in Using your business judgment, estimate the costs for a company in

your area to exhibit at the annual “Manufacturing Week” trade show in your area to exhibit at the annual “Manufacturing Week” trade show in Chicago. Chicago.

Expenses include:Expenses include:• Space rentalSpace rental• HotelHotel• Display boothDisplay booth• Shipping (2-way)Shipping (2-way)• Set-up/dismantleSet-up/dismantle

(union rate)(union rate)

(continued)

•Air travel for fourAir travel for four•VCRVCR•MealsMeals•EntertainmentEntertainment•Catalogs to pass out to attendeesCatalogs to pass out to attendees•Chairs, tables, carpet rentalChairs, tables, carpet rental

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Trade Shows and ExhibitsTrade Shows and Exhibits

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Sales PromotionSales Promotion

Advertising specialty items:Advertising specialty items:• CalendarsCalendars• PensPens• PostersPosters• Tape measuresTape measures• MugsMugs

If company name is on item that is handy to If company name is on item that is handy to buying center influencers, is it effective as buying center influencers, is it effective as goodwill or as a reminder?goodwill or as a reminder?

•Desk clocksDesk clocks•Calculator notepadsCalculator notepads•Desktop business card holdersDesktop business card holders•Travel alarm clocksTravel alarm clocks

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Winning Sales through Winning Sales through Cooperative PromotionCooperative Promotion

At Montana State University, Pepsi is out and Coke is in. In a At Montana State University, Pepsi is out and Coke is in. In a competitive bid, Coca-Cola has won the five-year contract to be the competitive bid, Coca-Cola has won the five-year contract to be the exclusive soft drink supplier for the entire MSU campus. To win the exclusive soft drink supplier for the entire MSU campus. To win the contract, Coke offered the school a combination of cash payments and contract, Coke offered the school a combination of cash payments and value through cooperative promotion.value through cooperative promotion.These promotions included:These promotions included:

• $250,000/year payments plus a commission on sales$250,000/year payments plus a commission on sales

• Cooperative marketing program including radio advertisingCooperative marketing program including radio advertising

• New soccer field scoreboard and ice machineNew soccer field scoreboard and ice machine

• Coke cans across the region to carry MSU logoCoke cans across the region to carry MSU logo

• Off-campus vending machines with MSU logo, plus commission Off-campus vending machines with MSU logo, plus commission on those saleson those sales

• (From (From Marketing News,Marketing News, November 8, 1999, p. 9.) November 8, 1999, p. 9.)

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business Direct and Interactive MarketingBusiness Direct and Interactive Marketing• Business-to-business direct marketing is big Business-to-business direct marketing is big

business—approximately $1 trillion/year.business—approximately $1 trillion/year.• TypesTypes

Direct mailDirect mail TelemarketingTelemarketing e-mail/Internete-mail/Internet

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Measuring the Effectiveness of the Measuring the Effectiveness of the Business Promotion CampaignBusiness Promotion Campaign

Pretesting and PosttestingPretesting and Posttesting Responses to Business AdvertisingResponses to Business Advertising

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Following up and Making Necessary Following up and Making Necessary ChangesChanges