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ME Ch 191 The Role of Promotion Promotion- any form of communication a business or organization uses to inform, persuade, or remind people about its products.

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Presentation on theme: "ME Ch 191 The Role of Promotion Promotion- any form of communication a business or organization uses to inform, persuade, or remind people about its products."— Presentation transcript:

1 ME Ch 191 The Role of Promotion Promotion- any form of communication a business or organization uses to inform, persuade, or remind people about its products and improve its public images.

2 Product promotion used to convince potential customers to buy products from it instead of from a competitor. –Explains major features and benefits of its products –Tells where those products are sold –Advertises sales on those products –Answers customer questions –Introduces new products Primary & Secondary

3 Primary product promotion Emphasis is on the product and its uses, and not on a particular brand. Primary product promotion aims to stimulate demand or consumer desire for an entire class of goods and services. Competition is between the two different industries. This type promotion useful when introducing a new concept or a totally new product. Ex. Coke vs. Pepsi

4 Secondary product promotion Also known as selective product promotion. Secondary product promotion is used to stimulate the demand for a specific brand of a product. Used to compete against other makers of the same type of product. Ex. Coke Zero vs. Pepsi Max

5 ME Ch 195 Institutional Promotion used to create a favorable image for itself. Does not directly sell a certain product. However, may ultimately result in increased sales of a companys products. There are three kinds of institutional promotion: –public service, –public relations, and –patronage.

6 ME Ch 196 Institutional Promotion (cont) the company is the focus of the promotion instead of any products it sells. concerned with the reputation of the store, with style leadership, quality merchandise and services. Organizations promote concepts, ideas or philosophies that they want consumers to associate with their brands. Ex. Scotties Tissues plants three trees for every one tree used emphasizing how important the environment is to the company.

7 ME Ch 197 Institutional Promotion (cont) tends to be expensive because it doesn't rely on immediate spending from the consumer. also forces the organization to be accountable for its promises. If the organization fails to live up to the image it has created in the promotions it will lose brand loyalists to its competitors.

8 Public service promotions inform customers about non-controversial issues that are in the publics best interest. Many times, companies sponsor public-service announcements on local television stations, highlighting issues such as community drug prevention or after-school participation in sports or arts programs. Public-service promotions build goodwill for the company, especially when they depict the company as a friend of the community. Ex.Insurance companies sometimes promote improved health through changes in dietary and exercise habits.

9 Public relations promotions created to deal with issues that are in the publics interest but are also related to the company or its products. These promotional activities may be either proactive (the business takes the initiative to promote itself) or reactive (the business engages in the activities in response to an external situation, such as a lawsuit). They are used to influence companys image directly, such as improving a negative image or establishing a positive one before negative feelings arise. Ex. After the oil spill in the Gulf of Mexico, BP used their own employees that lived in the Gulf area to reinforce the fact that the area is safe, food is safe, and efforts to clean up are successful.

10 Patronage Designed to get the customers coming back to the company, therefore, patronage promotion promotes a firms prestige or the firm features. Ex. PetSmart offers a Pet Perks loyalty card.

11 Uses of institutional promotion 1. Change a particular attitude toward a firm or its products: EX: In recent years, the tobacco industry has come under fire for promoting its products, which are associated with various form of disease. In an effort to clean up this negative image, tobacco companies such as Philip Morris have been engaging in institutional promotions such as its Quit Assist program and resources for helping smokers kick the habit.

12 Uses of institutional promotion (cont) 2. Inform customers of the companys interest in social or environmental issues: EX: Corporate giant IBM has a long-standing commitment to environmental leadership in the business world. The company has a written environmental-affairs policy and participates in many voluntary initiatives, such as membership in the Wildlife Habitat Council.

13 Uses of institutional promotion (cont) 3. Inform the public about the companys future: EX: When wireless communication provider Verizon bought Alltel in 2009, the company engaged in a promotional campaign to let its customers and the general public know about the change.

14 Uses of institutional promotion (cont) 4. Inform customers of the companys name and its type of business : EX: During the rise in the popularity of the Internet, many online travel agencies such as Expedia and Travelocity were born, and then they began promotions to let the public know about their services.

15 Uses of institutional promotion (cont) 5. Show the companys commitment to quality, technology, or research : EX: The worlds largest research-based pharmaceutical company, Pfizer, uses institutional promotion to demonstrate to the public its commitment to using research to help people live longer, healthier, happier lives.

16 Uses of institutional promotion (cont) 6. Enhance company morale and recruit new employees : EX: Battelle, a global science and technology corporation, holds many recruiting events and initiatives all over the country.

17 Uses of institutional promotion (cont) 7. Build or reinforce a favorable company image : EX: Coca-Colas $5 million donation of bottled water and other beverages to hurricane-ravaged New Orleans in 2005 is one example of institutional promotion meant to help build a highly favorable company image.

18 Advantages of promotional activities Promotion is an important part of the marketing mix that communicates information about goods, services, images, or ideas to customers. Promotion can accomplish a number of objectivesbuilding awareness, increasing demand, differentiating a product from its competitors, highlighting a products value, and changing or reinforcing customer attitudes.

19 Several advantages of promotional activities They contribute to economic growth and business activity. They support the mass communication media. Companies benefit directly because these activities create awareness of the company and its products. Customers benefit because these activities raise our standard of living and make us better educated customers who are able to make more intelligent purchases. Create jobs due to the need to mass produce products based on customer demand. Encourages consumers to purchase and use new and improved products

20 Disadvantages of promotional activities They can be deceptive, manipulative, and play on consumers fears. They can be offensive and reinforce stereotypes. They have limited abilities. –Product promotion does not add value to goods and services. –Institutional promotion can be costly and difficult to measure. –Promotion cannot make up for poor quality products –Promotion cannot substitute for well-trained sales staff/sales person –Promotion cannot achieve major success

21 REVIEW What are the 4 elements of the PROMOTIONAL MIX? What are the +s of each? What are the -s of each?

22 ME Ch 1922 Four Types of Promotion 1. Advertising - any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Six Advantages of Advertising –1. A large number of people usually see the advertisers message –2. Costs per potential customer are usually lower than other forms of promotion –3. Can choose the most appropriate media to reach target mkt –4. Can control the content of an advertisement –5. Ads are subject to repeat viewing –Ads can presale products

23 ME Ch 1923 Advertising Disadvantages Four Disadvantages of Advertising –1. Cannot focus well on individual needs –2. Some forms of advertising can be too expensive for many businesses –3. Sometimes advertising is wasteful and inefficient - message may be spent on non-potential customers –4. Advertising must be brief

24 ME Ch 1924 Four Types of Promotion 2. Publicity & PR- placing newsworthy information about a company, product, or person in the media. Can be used to promote particular events and promote particular products. The main purpose of publicity is to build an image. Image - the way a business or organization is defined in peoples minds.

25 ME Ch 1925 Publicity & PR + /- Advantages of Publicity –Publicity is free; advertising is not –Can be used to create a positive image within the community –Viewed as being more credible or believable than advertising –Viewed as news, people more attention to publicity Disadvantages of Publicity –Give up much of your control of your message –Not all publicity is positive –Lack of control by the business - bad stories can get printed

26 ME Ch 1926 Publicity and Public Relations Public Relations - any activity designed to create goodwill toward a business. Benefits of PR –Increasing sales –Increasing firms good reputation –Increasing customers reception of advertising messages –Spreading accurate information to the public –Conditioning customers to expect quality products from the company –Reducing the impact of problems –Helping to obtain better treatment from government

27 ME Ch 1927 Audiences for PR Internal Audiences - groups within the organization Employee Relations - goal is to keep your employees happy by using: –Tuition reimbursement –Newsletters –Health and wellness programs –Opportunities for communications

28 ME Ch 1928 Audiences for PR External Audiences - groups outside the organization Customers - Satisfied customers = repeat business. Ways to keep customers happy include: –Provide special services and amenities such as gift-wrapping, check cashing, free delivery, free parking, etc. –Advisory boards - panels of consumers that make suggestions about products and businesses –Customer newsletters, annual reports –Customer events - seminars, lunches, entertainment

29 ME Ch 1929 Audiences for PR Community - company sponsors activities that benefit the civic, social, and cultural life of the community. Activities can include: –School partnerships - HP donating computers to the high school –Sponsorship of community events –Scholarships

30 ME Ch 1930 PR – News Release = a pre-written story about the company that is sent to various media for publication. It usually contains information about the companys employees, stores, operations, products, corporate philosophy, or participation in an event or program. Can contain hard or soft news. –Hard News - information that should be announced right away because the public will want to know about it immediately –Soft News - information that does not need to be announced immediately because it will be of as much interest to the public later as it is now

31 ME Ch 1931 Purposes of News Releases To introduce new products To keep the business in the public eye To position the businesss image To support good employee relations To create good community relations

32 ME Ch 1932 Getting Your News Release in the Media Include a captioned photograph with the release Meet media deadlines Write an appropriate number of releases Direct the release to a specific person Advise the staff that you have sent out a release Reread the release after setting it aside Keep a copy of every release Send a cover letter with the release Send a thank-you note after the release is used Avoid pressuring the editor Avoid mentioning publicity or advertising Avoid playing favorites

33 ME Ch 1933 Public Relations Press Kit - a folder containing articles, news releases, feature stories, and photographs about a company, product, or person. Press kits are given to the media to assist them in reporting on the intended news item. Press Conference - a meeting in which media members are invited by the business or organization to hear an announcement about a newsworthy event.

34 ME Ch 1934 Four Types of Promotion 3. Sales Promotion - All marketing activities, other than personal selling, advertising, and publicity, that are used to stimulate consumer purchasing and sales effectiveness. Objectives of Sales Promotion –Increase sales –Inform customers about new products –Create a positive store or corporate image 3 Characteristics –Short term activities –Offers some type of incentive –Can be successfully used in all channels of distribution

35 ME Ch 1935 Sales promotion can be either consumer or trade oriented Trade Promotions - sales promotion activities designed to gain manufacturers, wholesalers, and retailers support for a product. More money is spent on promoting to businesses than to consumers. 1. Slotting allowances - a cash premium paid by the manufacture to a retail chain for the costs involved in placing a new product on its shelves. 2. Buying allowances - special price discount given by manufacturers to wholesalers and retailers to encourage them to either buy a product or buy a larger quantity. 3. Trade Shows and Conventions - designed to reach wholesalers 4. Sales incentives - awards given managers and employees who successfully meet or exceed their companys set sales quota.

36 ME Ch 1936 Sales promotion can be either consumer or trade oriented (cont) Consumer Sales Promotions - designed to encourage customers to buy a product. 1. Licensing - Organizations, such as manufactures, movie makers, sports teams, and celebrities, may license for a fee their logo, trademark, trade characters, names and likenesses, or personal endorsements to a business to be used in promoting the businesss products. 2. Promotional tie-ins - involve sales promotional arrangements between one or more retailers or manufacturers. They combine their resources (advertising and sales promotional activities) to do a promotion that creates additional sales for each partner.

37 ME Ch 1937 Consumer Sales Promotion (cont.) –3. Visual Merchandising and Displays - –Visual Merchandising - the coordination of all physical elements in a place of business so that it projects the right image to its customers –Displays - visual and artistic aspects of presenting a product to a target group of customers.

38 ME Ch 1938 Consumer Sales Promotion (cont.) 4. Premium and Incentives - most popular and frequently used sales promotion type Premiums - low cost items given away free to consumers as a condition of purchase. Coupons - certificates given to customers entitling cash discounts Factory Packs (in-packs)- free gifts placed in product packages Traffic Builders - low cost premiums like key chains, pens Coupon Plans - ongoing programs in exchange for labels, coupons, or other tokens from one or more purchases Incentives - higher-priced products given in contests or sweepstakes 5. Product Samples - free trial size of a product that is sent through the mail, distributed door-to-door, or through retail stores and trade shows

39 ME Ch 1939 Sales Promotion + /- Advantages of Sales Promotions –Unique and has special appeal to a potential customer –Helps build customer loyalty Disadvantages of Sales Promotions –Difficult to end without the customers becoming dissatisfied –Store image and sales can suffer if the promotion is not properly planned and managed –Only designed to supplement other promotional efforts and cannot make up for poor products

40 ME Ch 1940 Four Types of Promotion 4. Personal Selling - making an oral sales presentation to one or more potential buyers. On a per contact basis, personal selling is the most expensive form of promotion. –Order-taking personnel - cashiers, counter clerks, and sales associates, perform routine tasks. –Order-getting personnel - professional salespeople, are more involved in informing customers and helping them to buy. Usually sell big ticket items like real estate, cars, appliances, and industrial goods

41 ME Ch 1941 Promotional Mix = a combination of different types of promotion. A business decides on a promotional mix that will be most effective in persuading customers or other businesses to purchase and support the businesss products.

42 ME Ch 1942 Promotional Mix Factors affecting the selection of a promotional mix –Good, Service, or Idea Type of product Product nature Stage of life cycle –Products market Type of consumer Number of Consumers Geographical location

43 ME Ch 1943 Promotional Mix Factors (cont) –Distribution System –Products Company Historical perspective Available funds Size of sales force –Competition >>>> LAP HANDOUT - READ & HIGHLIGHT

44 Three types of products (effects the promotional mix) convenience, shopping, and specialty

45 Convenience products items that are purchased frequently with minimal effort. EX: toothpaste, ballpoint pens, and eggsall routine buying decisions. Because customers are typically already familiar with these products, personal selling need not be included in the promotional mix. Instead, advertising and sales promotion are used to promote them.

46 Shopping products goods and services such as automobiles, laptop computers, and cell phone plans that are purchased after a customer has made comparisons of competing products. The customer checks prices, styles, colors, and qualities of different products and shops around for the best buy. Personal selling and national television advertising are often used to promote shopping products.

47 Specialty products have unique characteristics that are prized by customers who make special efforts to obtain them. Customers who purchase consumer specialty products, for instance, spend a good deal of time making their selections. Examples include expensivejewelry and rare antiques. The same is also true of industrial specialty goods such as complicated medical equipment and sophisticated computer software. Businesses usually do extensive research before purchasing such expensive technical products.

48 Specialty products (cont) Typically require more personal selling so that customers can learn about product features as well as how to operate the products. Also, in many cases, the image associated with a specialty product determines the type of promotional mix used. Marketers promoting designer handbags and expensive sports cars, for instance, often incorporate distinctive advertising, specialty catalogs, attractive visual displays, and publicity in their promotional mixes.

49 Stage of life cycle effects the promotional mix Just as people develop and mature by stages, so do goods and services. They go through life cycles by stages that include being introduced to the market, growing, maturing, and declining.

50 Introductory stage During a products introductory stage, the new product is introduced to the market. Promotional efforts are designed to inform customers about the existence of the new product. Sales promotions and advertising are commonly used at this stage of the products life.

51 Growth stage Competing products appear during the products growth stage. Promotional activities focus on pointing out differences between products. Advertising is used extensively.

52 Maturity stage At this point in the product life cycle, the product is well-established on the market. Promotion is used to remind customers of the products benefits

53 Declining stage During a products declining stage, newer products enter the market, taking the place of existing ones. Companies may slow or stop production of the product. The little money that is invested in promotional activities is often aimed at maintaining a positive image for the company.

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