Chapter 12

Promotion Mix:

Communicating Customer Value

Samsung: http://www.youtube.com/watch?v=qXpVhTiePHQ&feature=PlayList&p=9326466B81B9D840&index=4

Tea: http://www.youtube.com/watch?v=K_zEiNPNo5A&feature=related

NBK: http://www.youtube.com/watch?v=cQ-Jsc3QnQc

360 Mall: http://www.youtube.com/watch?v=4c7Bj3isXFI

The company’s total promotion mix (also called the marketing communications mix) consists of a specific blend of:

Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or

services by an identified sponsor. Sales promotion:

Short‑term incentives to encourage the purchase or sale of a product or service (coupons, discounts, contests, lottery,…).

Personal selling: Personal presentation by the firm’s sales force for the purpose of making sales

and building customer relationships. Direct marketing:

Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships (direct mails, catalogs, telephone marketing, online marketing,…).

Public relations: Building good relations with the company’s various publics by obtaining favorable

publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

The Promotion Mix

Several factors are changing the face of marketing communications: Consumers are better informed and more communications

empowered. Mass markets have fragmented, leading marketers to a shift

away from mass marketing. Changes in communications technology have created new media

for interacting with targeted consumers. These factors have shifted the marketing

communications model so that firms are doing less broadcasting and more narrowcasting.

Integrated Marketing Communications

Integrated Marketing Communications A strong need for integrated marketing

communications exists. Integrated marketing communications:

Carefully integrating and coordinating the company’s many communication channels to deliver a clear, consistent, and compelling message about the organization and its products.

Shaping the Overall Promotion Mix Nature of advertising:

Can reach masses of geographically dispersed buyers at a low cost per exposure

Can repeat a message many times Consumers view advertised products as more

legitimate Is impersonal, one-way communication Can be very costly for some media types

Nature of sales promotion: Wide assortment of tools which depends on

company’s objectives Attracts consumer attention Can be used to dramatize product offers Offers strong incentives to buy Invites and rewards quick consumer response Effects are short-lived, what does it mean?

Shaping the Overall Promotion Mix

Nature of personal selling: Involves personal interaction between two or

more people Most effective tool at building preferences Allows relationship building and two-way

communication Requires long-term commitment to sales force Most expensive promotion tool

Shaping the Overall Promotion Mix

Nature of direct marketing: Many forms of direct marketing exist. Direct marketing forms share four primary

characteristics: Nonpublic Immediate/directed to a specific person Customized Interactive

Well suited to highly targeted marketing.

Shaping the Overall Promotion Mix

Nature of public relations: Very believable Reaches people who avoid salespeople and ads Can dramatize a company or product Tends to be used as an afterthought Can be effective and economical

Shaping the Overall Promotion Mix

Promotion Mix Strategies

Push strategy: Promotion strategy that calls for using the sales

force and trade promotion to push the product through channels.

Pull strategy: Promotion strategy that calls for spending a lot on

advertising and consumer promotion to induce final consumers to buy the product.

Manufacturer Wholesaler Retailer Consumer

Manufacturer Wholesaler Retailer Consumer

Push vs. Pull Strategies

Push strategy

Pull strategy

Manufacturer Wholesaler Retailer Consumer

Manufacturer Wholesaler Retailer Consumer

Advertising

Advertising has been used for centuries. U.S. advertisers spend more than $285 billion each year;

worldwide spending exceeds $604 billion. Advertising is used by:

Business firms Not-for-profit organizations Professionals Social agencies Government

Major Advertising Decisions

Setting advertising objectives Setting the advertising budget Developing advertising strategy Evaluating advertising campaigns

Major Advertising Decisions

Advertising objective: Specific communication task to be accomplished

with a specific target audience during a specific period of time.

Advertising objectives can be classified by purpose: Inform (e.g., new Crest toothpaste) Persuade (e.g., emphasize the benefits) Compare (e.g., between competitors; not allowed in

Kuwait, but very common in USA) Remind (e.g., Coke, Pepsi)

Major Advertising Decisions

Setting the advertising budget: Affordable method Percentage-of-sales method Competitive-parity method Objective-and-task method

Developing advertising strategy: Creating advertising messages.

Message strategy and message execution must break through the clutter

Selecting advertising media. Set reach, frequency, and impact goals

Reach: Percentage of people exposed to ad. Frequency: Number of times a person is exposed to

advertisement. Media Impact: The qualitative value of a message

exposure through a given medium. Choose among major media types Select specific media vehicles Decide on media timing

Major Advertising Decisions

Return on advertising investment: Is equal to the net return on advertising investment divided

by the costs of the advertising investment. Evaluating advertising involves:

Measuring the communication effects of an ad—“Copy Testing.”

Measuring the sales effects of an ad: Is the ad increasing sales?

Evaluating Advertising and Return on Advertising Investment

Organization of ad function: Small companies—one person in firm. Large companies—ad department that may also

work with an ad agency. Advertising agencies employ specialists who

perform ad tasks better then the company’s own staff can. Bring outside viewpoints to problem-solving. Wide range of experience.

Other Advertising Considerations

Public Relations

Public relations: Building good relations with the firm’s various

publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.

Public Relations

Public relations departments perform the following functions: Press relations or press agency Product publicity Public affairs Lobbying Investor relations Development

Public Relations Role and Impact

Public relations: May strongly impact public awareness at a lower

cost than advertising. Can yield spectacular results. Is beginning to play an increasingly important

brand-building role.

Major Public Relations Tools

Corporate identity materials

Public service activities Social networking Company Web site

News Speeches Special events Written materials Audiovisual materials