1 14. Promotion & Pricing Strategies

2 Topics Promotion The promotion mix Promotion planning Developing the promotion mix Pricing objectives Setting prices

3 Promotion One of marketing’s four P’s Informs, persuades, reminds May be direct –Face-to-face May be indirect –Through media

4 The Promotion Mix Advertising Personal selling Sales promotion Public relations

5 Advertising Classification methods: –Purpose classified Product (brand) advertising Institutional advertising –Sponsor classified National advertising Local advertising Cooperative advertising –Target classified Consumer advertising Industrial advertising Media Social/legal considerations

6 Personal Selling Most expensive method of promotion Salespersons –Field selling – Telemarketing –Over-the-counter selling Sales support –Missionary salespeople– Trade salespeople –Technical salespeople Personal selling process –Prospecting & qualifying– Answering objections –Approaching prospect– Closing sale –Making presentation– Following up –Demonstration

7 Sales Promotion Inducements to customers or salespersons Supplement other promotional methods Factors affecting choice of sales promotion methods: –Product characteristics –Target market characteristics –Distribution channels –Competitive & regulatory forces Important methods: –Rebates– Contests – Trade shows –Coupons– Specialty advert. – Buying allow- –Samples– POP displays ances –Premiums– Frequent user incentives

8 Public Relations Public relations tools –Written materials –Corporate-identity materials –Speeches –Event sponsorship –Publicity Always free May be positive or negative Most widely used type: press release PR enhances reputation, creates image, reduces unfavorable effects of negative events

9 Promotional Planning Promotional campaign –Including product placement & guerilla marketing Integrated marketing communication (IMC) Promotion objectives: –Providing information –Increasing market share (i.e., sales volume) –Positioning the product –Stabilizing sales

10 Developing the Promotion Mix Begins with objectives: Identify target market –Focus on middlemen: Push strategy –Focus on end users: Pull strategy Further steps in promotion planning process: –Review marketing strategy– Develop IMC prog. –Conduct environ. assessment– Implement IMC prog. –Establish objectives– Assess effectiveness –Develop budget

11 Pricing Objectives for Products Profitability-related –Target return on investment –Maximize profitability Market share growth Status quo maintenance Positioning-related

12 Setting Prices Methods: –Demand-based pricing Strong demand  high price Weak demand  low price –Cost-based pricing Breakeven analysis –Breakeven quantity »No. of units sold at which total revenue = total cost –Fixed vs. variable costs –Competitive-based pricing Below, same, or slightly above competitor prices Price skimming, penetration pricing, EDLP