1. McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Consumer Behavior and Promotion Strategy Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 17

3. 17-3 Types of Affective Response

4. 17-4 Marketers develop promotions to communicate information about their products and to persuade consumers to buy them –Advertising –Sales promotions –Personal selling –Publicity Successful products and brands require promotions to create and maintain a differential advantage over their competitors Types of Promotion

5. 17-5 Advertising Any paid, nonpersonal presentation of information about a product, brand, company, or store –Usually has an identified sponsor –Characterized as image management Creating and maintaining images and meanings in consumers’ minds –Ultimate goal is to influence consumer’s purchase behavior –May be conveyed via a variety of media

6. 17-6 Direct inducements to the consumer to make a purchase –Difficult to define sales promotions due to many types –Key aspect of sales promotions is to “move the product today, not tomorrow” –Most sales promotions are oriented at changing consumers’ immediate purchase behaviors –Coupons remain the most popular form of sales promotions Sales Promotion

7. 17-7 Personal Selling Direct interactions between a potential buyer and a salesperson –What makes it a powerful promotion method? May increase consumers’ involvement with the product and/or decision process Interactive communication allows salespeople to adapt their sales presentation to individual customer needs

8. 17-8 Personal Selling cont. –Certain consumer products are traditionally promoted through personal selling –For other businesses, a form of personal selling by telephone, called telemarketing, has become popular –Direct mail has increased in popularity to counteract increasing restrictions on telemarketing

9. 17-9 Any unpaid form of communication about the marketer’s company, products, or brands –Can either be positive or negative –Can sometimes be more effective than advertising because consumers may not screen out the messages so readily –Publicity can be considered more credible than advertising as it is not represented by the marketing organization Publicity

10. 17-10 Ideally, marketing managers should develop a coherent overall promotion strategy that integrates the four types of promotions into an effective promotion mix –A controversy continues in marketing about the relative importance of advertising vs. sales promotions –The promotion mix of the future is likely to be more eclectic with many more options –Advertising seems to be having a declining influence on consumers’ behavior due to various factors The Promotion Mix

11. 17-11 A Communication Perspective The cognitive processing model of decision making is relevant to an understanding of the effects of promotions on consumers –Consumer’s must be exposed to the promotion information –Attend to the promotion communication and comprehend its meanings –The resulting knowledge, meaning, and beliefs must be integrated with other knowledge to create brand attitudes make purchase decisions

12. 17-12 A Communication Perspective cont.

13. 17-13 The Communication Process Developing successful promotion strategies is mainly a communication problem –Key factors Source Encode Transmit Receiver Decode Action –Particularly important stages for success Encoding Decoding

14. 17-14 Goals of Promotion Communications Goals of promotion communications –Effects can be ordered in hierarchical sequence of events or actions that are necessary before consumers can or will purchase a brand Consumers must have a recognized need for the product category or product form Consumers must be aware of the brand

15. 17-15 Goals of Promotion Communications cont. Consumers must have a favorable brand attitude Consumers must have an intention to purchase the brand Consumers must perform various behaviors to purchase the brand

16. 17-16 Stimulate Category Need Need to create beliefs about the positive consequences of buying and using the product category or form –Marketers need to create beliefs about the positive consequences of buying and using the product category or form –Typically use advertising to stimulate category need

17. 17-17 Brand Awareness A general communication goal for all promotion strategies –Level of brand awareness necessary for purchase varies depending on how and where consumers make their purchase decisions –Ask consumers to state the brand names they can remember or recognize as familiar –A company’s brand awareness strategy depends on how well known the brand is

18. 17-18 Brand Attitude Create a brand attitude Maintain existing favorable brand attitudes Increase the existing brand attitude Cannot analyze consumers’ brand attitudes in an absolute or very general sense without specifying the situational context

19. 17-19 Brand Purchase Intention Most promotion strategies are intended by marketers to increase or maintain the probability that consumers will buy the brand –To develop effective promotion strategies directed at brand purchase intention, marketers must know when BI are formed by most of the target customers

20. 17-20 Brand Purchase Intention cont. –More typically, formation of a brand BI is delayed until well after exposure to advertising, when the consumer is in a purchase context –Personal selling and sales promotion are usually designed to influence purchase intentions at the time of exposure to the promotion information

21. 17-21 Facilitate Other Behaviors Some promotion strategies are designed to facilitate behaviors other than purchase –Sales promotions and publicity are likely to have little influence on these other behaviors, but advertising and personal selling strategies may increase their probability

22. 17-22 The Promotion Environment Includes all stimuli associated with the physical and social environment in which consumers experience promotion strategies Two environmental factors can influence advertising and sales promotion strategies –Promotion clutter –Level of competition

23. 17-23 Promotion Clutter The growing number of competitive strategies in the environment –Possible that clutter created by multiple ads during commercial breaks and between TV programs will reduce the communication effectiveness of each ad –Also affects other types of promotion strategies, especially sales promotions

24. 17-24 Level of Competition A key aspect of the promotion environment –Comparative advertising, featuring direct comparisons with competitive brands, has become more common –Promotion often becomes the key element in the marketers’ competitive arsenal in fiercely competitive environments

25. 17-25 Promotion Affect and Cognition Interpretation of promotion communications and integration processes are extremely important Consumers’ comprehension processes vary in depth and elaboration, depending on their levels of knowledge and involvement –Concepts relevant to understanding the effects of advertising Consumers’ attitudes toward ads Persuasion processes

26. 17-26 Attitude toward the Ad The affective evaluations of the ad itself can influence the attitudes toward the advertised product or brand Ads that consumers like seem to create more positive brand attitudes and purchase intentions than ads they don’t like A positive attitude toward an ad may not always lead to increased purchase of the brand

27. 17-27 The Persuasion Process Changes in beliefs, attitudes, and behavioral intentions caused by a promotion communication –The Elaboration Likelihood Model (ELM) Identifies two cognitive processes by which promotion and communication can persuade consumers Also distinguishes between two types of information in the promotion communication

28. 17-28 Two Routes to Persuasion in the ELM

29. 17-29 Promotion Behaviors Different types of promotions can be used to influence the various behaviors in the purchase–consumption sequence –Information contact –Word-of-mouth communication with other consumers

30. 17-30 Information contact Consumers must come into contact with promotion information for it to be successful –Information contact with promotions may be intentional most often incidental –Placing information in consumers’ environments may be easy when target consumers can be identified accurately

31. 17-31 Promotion Behavior cont. –Cold calls vs. referrals and leads –Use of telemarketing –Consumers must also attend to the promotion messages –Level of attention also depends on how well promotion interacts with consumer characteristics such as intrinsic self-relevance and exiting knowledge

32. 17-32 Word-of-Mouth Communication Helps spread awareness beyond those consumers who come into direct contact with the promotion –Placing promotion information in consumers’ environments, increases the probability that the information will be communicated to other consumers

33. 17-33 Managing Promotion Strategies Four key activities –Analyze consumer–product relationships –Determine the promotion objectives and budget –Design and implement a promotion strategy –Evaluate the effects of the promotion strategy

34. 17-34 Analyze Consumer-product Relationships Requires identifying the appropriate target markets for the product –Marketers should also understand the deeper symbolic meaning of their brand –The FCB grid Based on consumers’ involvement and their salient knowledge, meanings, and beliefs about the product Think products Feel products The appropriate promotion strategy depends on the product’s position in the grid

35. 17-35 Analyze Consumer-Product Relationships cont.

36. 17-36 Determine Promotion Objectives and Budget Promotion strategies may be designed to meet one or more of the following objectives –To influence behaviors –To inform –To transform affective responses –To remind

37. 17-37 Managing Promotion Strategies cont. Marketers should determine their specific promotion objectives and the budget available to support them before designing a promotion strategy Some promotions have multiple objectives Some promotions are designed to first influence consumers’ cognitions in anticipation of a later influence on their overt behaviors

38. 17-38 Design and Implement a Promotion Strategy

39. 17-39 Designing Promotion Strategies Must be sensitive to the consumer-product relationships represented in different market segments –Various consumer segments to be considered –Appropriate promotions depend on the type of relationship consumers have with the product or brand, especially their intrinsic self-relevance –Promotion methods vary in their effectiveness for achieving certain objectives –Promotion objectives will change over a product’s life cycle

40. 17-40 Developing Advertising Strategy Specify advertising strategy in terms of the type of relationship the consumer will have with the product or brand –MECCAS model, based on consumers’ means- end chains, helps marketers understand the key aspects of ad strategy and make better strategic decisions Driving force Leverage point Consumer benefits Message elements The executional framework part of the creative strategy

41. 17-41 The MECCAS Model

42. 17-42 Developing Advertising Strategy cont. –Steps in creating an advertising strategy Consumer-product relationship –Message elements –Consumer benefits –The driving force –Leverage point An advertising strategy should specify how a brand will be connected to the important ends the consumer wants –Executional framework: the various details of the creative strategy –Marketers still must carefully analyze consumers and use their creative imaginations

43. 17-43 Developing Personal Selling Strategies ISTEA model ( impression, strategy, transmission, evaluation, and adjustment ) –Suggests salespeople’s influences depend on their skills at performing five basic activities Developing useful impressions of the customer Formulating selling strategies based on these impressions Transmitting appropriate messages

44. 17-44 Developing Personal Selling Strategies cont. Evaluating customer reactions to the messages Making appropriate adjustments in presentation should the initial approach fail –ISTEA model is consistent with the communication approach to consumer promotions –Model emphasizes analysis of the customer as the starting point

45. 17-45 A Model of the Personal Selling Process

46. 17-46 Evaluate Effects of the Promotion Strategy Involves comparing its results with the objectives –Determining promotion effects can be difficult –Promotion objectives stated in behavior terms can be hard to evaluate –In some cases, evaluation of promotion effects can be relatively straight-forward

47. 17-47 Measuring Advertising Effects Wide variety of approaches have been taken to measuring advertising effects –Pretesting –Copy testing Three broad criteria used as indicators of advertising effectiveness: –Sales –Recall –Persuasion

48. 17-48 Summary Discussed how knowledge about consumers’ affect and cognitions, behaviors, and environments can be used by marketers in developing more effective promotion strategies Described four types of promotions Detailed how the basic communication model can be used

49. 17-49 Summary cont. Discussed important aspects of the promotion environment, affective and cognitive responses to promotions, and promotion-related behaviors Examined a managerial model for designing and executing promotion strategies

50. 17-50 Summary cont. Described the various goals and objectives marketers may have for promotion strategies Looked at two special models for developing advertising strategies and personal selling strategies Discussed how to evaluate the effectiveness of promotion strategies