Chapter 2 1

Promotional StrategyMKT4230

The Role of IMC in the

Marketing Process

Patricia Knowles, Ph.D.

Associate Professor

Clemson University

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2Promotional StrategyMKT4230

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Geico Marketing SuccessThis picture presents the latest face of GEICO, the Gecko. It represents the ever-changing face of Geico Insurance and how it broaden its customer base through national visibility.

The Gecko appeared during the 1999-2000 television season, followed by the Cavemen in 2004. The amazing popularity of the Gecko and Cavemen campaigns resulted in them being enshrined in Advertising Week magazine’s “Walk of Fame.”

TextbookPage 41

But there were additional efforts that led to GEICO’s success:• Direct mail• Internet advertising, customer service, appraisals, and

sales• A Facebook page, Twitter feeds, a Flickr site, YouTube,

and the GEICO Blog• Extensive use of promotional giveaways• The Gecko travels the country as a “spokes creature”

for wildlife conservation efforts

GEICO now has 10 million policyholders and assets of more than $24 billon.


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Marketing and Promotions Process Model This model provides an overview of a firm’s marketing process and how promotion fits into the program. It shows how promotion fits into an organization’s marketing strategy and programs.

TextbookPages 42 - 43 / Figure 2 - 1

The model consists of four major components:

• Marketing strategy and analysis

• Target marketing process

• Marketing planning program development

• Target market

Opportunity Analysis Competitive

Analysis

Target Market

Selection


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Marketing Strategy and AnalysisThis visual identifies the three steps that are required to develop a strategic marketing plan.

TextbookPages 43 - 46

A careful analysis of the marketplace can lead to

alternative market opportunities for existing

product lines, new products for current markets, or new products for new markets.

Strategic Marketing Plan

After evaluating the opportunities identified

during the opportunity and competitive analysis, a

company must select one or more target markets. This

target market becomes the focus of the firm’s marketing

effort, and has direct implications for advertising

and promotional efforts.

It can range from direct brand competition to more

indirect forms of competition, such as product

substitutes. The goal is to find a competitive

advantage.


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The Target Marketing ProcessThe process by which marketers develop different marketing strategies to satisfy different customer needs is called target marketing. The basic steps of this process are shown below:

The art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it apart from the competition.

TextbookPages 46 - 55 / Figure 2 - 2

Identify markets with unfulfilled needs

Determine market segmentation

Select a market to target

Position through marketing strategies

This isolates consumers with similar lifestyles, needs, and wants.

Dividing a market into distinct groups that have common needs and will respond similarly to a marketing action.

Determining how many segments to enter, and which segments offer the most potential.


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Target Market IdentificationThis visual presents some of the many ways in which target consumers may be identified.

TextbookPage 46

Isolate Consumers With Similar…

Lifestyles

This is how target market identification isolates consumers with similar needs, lifestyles, and so on. This segmentation allows companies to establish common ground with consumers, which in turn results in more effective marketing and communication programs.

This would be a good time to show the Kraft Foods Philly Cream Cheese video commercial, which targeted an Hispanic audience.

Social Class

Marital Status Needs

Lifestyles AgeGeographic Location


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Market Segmentation“Market Segmentation” is dividing a market into distinct groups with common needs and who respond similarly to a marketing situation.

TextbookPage 47 - 48

• The more a market is segmented, the more precise is the marketer’s understanding of it

• However, the more segmented the market becomes, the fewer consumers there are in it

• When planning a promotional effort, managers must consider whether the target segment is substantial enough to support individualized strategies


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Bases for Market SegmentationBelow are some of the bases for market segmentation. Older people may have an occasional use for baby food products, as when taking care of grandchildren, but the heaviest users would be in their prime childbearing years. Likewise, the largest segment of cane users would be seniors.

TextbookPages 48 / Figure 2 - 4

Demographics

GenderAgeRace

Life StageBirth Era

Household SizeResidence Tenure

Marital Status

Geographic

RegionCity Size

Metropolitan AreaDensity

Socioeconomic

IncomeEducation

Occupation

Psychographic

PersonalityValues / Lifestyle


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Geographic SegmentationBig Red targets a specific geographic region. Companies have developed program target to customer is a specific region of the country. In this case, Big Red is a successful regional “cult” brand in Texas.

TextbookPages 48 / Exhibit 2 - 7


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Demographic Segmentation AdThis slide shows the cover of AARP VIVA, which targets the 50+ Hispanic segment.

TextbookPages 50

It is an example of when a market is divided on the basis of…

• Age• Sex• Family size• Education• Income• Social class


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Benefit Segmentation AdThis is an example of an ad targeted to consumers looking for a specific benefit. Benefit segmentation is grouping consumers on the basis of attributes sought in a product. In this case, AT&T is offering worldwide cell phone coverage.


Who might be included in this market segment?

• Business travelers• People going overseas on vacation• Etc.

What other types of products can you think of that are marketed on the basis of benefits?

• Toothpaste• Low-energy light bulbs• Running shoes• Etc.


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PRIZM Social GroupsThis visual shows examples of PRIZM clusters developed by Claritas.


HIGH

LOW

$

Here are types of information that research companies offer marketers to help them define their markets and develop targeting strategies.

The chart provides demographic and psychographic profiles of geographic areas as small as census track, block group, or zip code +4. Users of this system include Ace Hardware, Walmart, and AOL, among others.


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Test Your KnowledgeAll of the following are considered market coverage alternatives except:

A) Undifferentiated

B) Differentiated

C) Concentrated

D) Dispersed


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Selecting a Target MarketThese are the two steps that must be performed to select a target market:


Determine how many segments to enter

Determine which segments have the greatest potential

1

2

There are three market coverage options available to marketers:


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Segments

TextbookPages 53

Ignores segment differences and offers just one product or service to the entire market.

Differentiated

ConcentratedUndifferentiated

Involves marketing in a number of segments, but

developing separate marketing strategies for each.

Involves selecting and trying to capture a large share of a

single segment.


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Market Positioning“Market Positioning” is fitting the product or service to one or more segments of the broad market in such a way as to set it apart from competition.

TextbookPages 54

Lifewater, as shown in this ad, positions itself as a vitamin-rich water. Can students identify other brands of water and their positioning strategy?

Examples include Fiji Water, which is bottled on the island of Fiji, and Perrier, which positions itself as a luxury item.

Waters may also be marketed as spring, mineral, purified, flavored, carbonated, or health-related, and good packaging can command a premium price.


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Positioning StrategiesThere are seven positioning strategies:


Use / ApplicationAttributes / Benefits Price / Quality

Competitors

Product Class

Product Users Cultural Symbols

A common approach is setting the brand apart

from competitors on the basis of specific

characteristics or benefits. Marketers attempt to

identify salient benefits, which are those that are important to customers when making purchase

decisions

Using price as characteristic of the brand. If a product is positioned as high quality, price may

be a secondary consideration. Another

option is to focus on product quality or value offered at a competitive

price.

Associate the brand with a specific use. This

approach can be an effective way to expand

usage of a product.

Positioning your product against a product in

another category, rather than against a

competitor. For example, positioning frozen orange

juice against fresh oranges.

Associating a brand with a type of person or group

that uses a product or service.

Positioning a company or brand against a

competitor. Often another form of

positioning is used as well to differentiate the

brand.

Using a cultural symbol to differentiate a product from competitors (e.g. Keebler elves, the Jolly Green Giant, Tony the

Tiger).

Repositioning

Involves altering or changing the position of a

product or brand, and usually occurs because of

stagnant or declining sales.


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Positioning by Cultural SymbolAn example of a cultural symbol, Tony the Tiger.

TextbookPage 57

How many other symbols can students name, beyond those mentioned in the text?

• The Marlboro Man• Aunt Jemima• Mrs. Butterworth’s• Mickey Mouse• Ronald McDonald• The Trix Rabbit• Michelin Man• Betty Crocker• Energizer Bunny


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The Marketing Planning ProgramThis is an overview of the four types of decisions that will influence and interact with the promotional program.


What can and should be charged

Price Decisions

Product Decisions

Promotional Strategy

Distribution Channels

Branding and Packaging Direct or Indirect

Push or Pull


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Branding GoalsThe overall goals of branding:

TextbookPage 59

Build and foster relationships between the

consumer and the brand

Build and maintain brand awareness

and interest

Develop and enhance attitudes

toward the company, product,

or service


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Forms of Direct MarketingThis is the difference between Brand Identity and Brand Equity:

TextbookPage 59

Brand Equity is the added value or goodwill; as well as

the results from the favorable image, impressions of differentiation, and/or the

strength of consumer attachment to a company

name, brand name, or trademark

Brand Identity is the combination of the name,

logo, symbols, design, packaging, and image

associations held by the consumer


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Branding and Packaging DecisionsBranding and Packaging are related and must work together to help create a position and/or image.


Basic functions of packaging are economy, protection, and storage. Additional functions…

• Making a favorable first impression• Distinguishing one product from all the others competing for attention• Communicating information• Satisfying legal requirements regarding composition and content• Carrying sales promotion messages (premiums, contests, sweepstakes)

BRANDING

Brand name communicates attributes and

meaning

Advertising creates and maintains

brand equity

Has become increasingly important

Often the customers’ first

exposureto product

PACKAGING


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Packaging Creates ImageThis is an ad for Saks Fifth Avenue perfume. It is a good example of the importance of packaging in creating a distinct identity and brand image.


It shows the importance of packaging in creating brand identity and image.

Packaging can be used to communicate, hold the consumer’s attention, and differentiate a brand from competitors.


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Pricing DecisionsA firm must consider a number of factors in determining the price it charges for its product or service, including costs, demand factors, competition, and perceived value. It must also consider what the ultimate consumer is willing to give up to purchase the product or service.

TextbookPage 60

What consumers give up to buy a product or service

Time

Mental activity

Behavioral effort

Factors the firm must consider

Costs

Demand

Competition

Perceived valueFrom an IMC perspective, the price must be

consistent with the perceptions of the product, as well as the communications strategy.


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Relating Price to Ads and PromotionsHere are key aspects of pricing decisions in an IMC program. What a firm charges for a product or service must be consistent with its advertising and promotional campaigns.

Products and services positioned as “high quality” usually carry a higher price. A low price indicates bargain or value positioning. It is important to point out that a product positioned as high quality while carrying a lower price than competitors will confuse customers.

TextbookPage 60

Price must be consistent with perceptions of the product

Higher prices communicate higher product quality

Lower prices reflect bargain or “value” perceptions

Price, advertising, and distribution must be unified in identifying product position


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Market Channels This is the Definition of Market Channels:

TextbookPage 61

Sets of interdependent organizations involved in the

process of making a product or service available for use


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Consumer vs Trade PromotionsThese are some of the items that must be considered when choosing a distribution channel.

TextbookPage 61

The impact that a channel can have on the overall communications objectives:

• Is the product better suited to distribution through Neiman Marcus or Kmart?

• What types of displays are available and needed in the store?

• What type of point-of-purchase merchandising is possible?

• How much shelf space is available, and where?

Channels can impact communication objectives:

• Image• Store displays• Point-of-purchase merchandising• Shelf footage

Distributing products via a channel is optional. Some companies sell directly to consumers, bypassing the middle-man.


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Types of ChannelsHere are the differences between direct and indirect channels:

TextbookPage 61

Many companies successfully use direct marketing, including Avon, Tupperware, and Mary Kay.

However, most consumer-product companies distribute through indirect channels, usually a network of wholesalers that sell to retailers, or retailers who sell directly to the consumer.

Direct

• Driven by direct-response ads, telemarketing, the Internet

• Often used when selling expensive and complex products

Indirect

• Network of wholesalers and/or retailers


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Push vs. Pull StrategiesA company can use either a push or pull marketing strategy:

• Push Strategy: Involves motivating the channel members to stock and promote a manufacturer’s products. A push strategy encourages resellers to push merchandise through to their customers.

• Pull Strategy: Involves spending money on advertising and sales promotion efforts directed toward the ultimate consumer. The goal of a pull strategy is to create consumer demand, which encourages retailers to request the product from the retailer.


The choice of a strategy depends on a number of factors, including the company’s relations with the trade, its promotional budget, and demand for the firm’s products.

Companies often use both of these strategies, with the emphasis changing as a product moves through its life cycle.


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Test Your KnowledgeAn ad in a publication aimed at veterinarians explains why they should recommend Eukanuba cat food to the owners of the cats they treat. This is an example of:

A) Consumer advertising

B) A promotional pull strategy

C) A harvesting strategy

D) A consumer promotion

E) A promotional push strategy

Date post:	12-Jul-2015
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