Integrated Communication Strategy and Promotion Tools Week 9- 11-29-04 Integrated Communication Strategy and Promotion Tools

Communication The process by which we exchange or share meanings through a common set of symbols. Notes: Promotional strategy is closely related to the process of communications. When a company develops a new product, changes an existing one, or tries to increase sales, it must communicate its selling message to potential customers.

The Communication Process Noise Sender Encoding Message Feedback Message Channel Decoding Receiver Notes: Marketing communication is a two-way process, as shown in Exhibit 14.3.

Marketing Communications Strategy Let’s communicate with customers… Steps to follow: Identify Target audience, Expected Response (objectives), Design the Message, Select the Media (importance of continuity: INTEGRATION of the COMMUNICATION MIX), Feedback. One Main constraint: The budget. How much to spend? For further details about this topic see page468 2

Setting the Communication Budget Wide possible range Affordable method - ignores promotion impact on sales Percent of sales method - not opportunity based Competitive parity method - company needs are individual Task and Objective Method Define specific promotion objectives Determine tasks needed to achieve Estimate costs of tasks Sum costs to set total promotion budget For further details about this topic see page478-480 17

Integrated Marketing Communications The Need for Integrated Marketing Communications Conflicting messages from different sources or promotional approaches can confuse company or brand images

Marketing Communications Mix Advertising Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Personal Selling Personal presentation by a 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 cultivating lasting customers relationships. For further details about this topic see page468 4

Marketing Communications Mix Public Relations Building good relations with the company’s various publics by obtaining favourable publicity, building a good corporate image and handling stories or events. Sales Promotion Short-term incentives to encourage the purchase or sale of a product or service Most impact when coordinated with entire marketing mix.

Goals and Tasks of Promotion Informing Reminding Persuading Target Audience

Goals and Tasks of Promotion Informative Objective Increase awareness Explain how product works Suggest new uses Build company image

Goals and Tasks of Promotion Persuasion Objective Encourage brand switching Change customers’ perception of product attributes Influence buying decision Persuade customers to call On Line Tide Consider Tide detergent’s Web site as a promotional tool. Visit the site and decide whether you think the main goal of the site is: informing, persuading, or reminding. Explain your choice.

Goals and Tasks of Promotion Reminder Objective Remind customers that product may be needed Remind customers where to buy product Maintain customer awareness On Line Tide Consider Tide detergent’s Web site as a promotional tool. Visit the site and decide whether you think the main goal of the site is: informing, persuading, or reminding. Explain your choice. On Line http://www.tide.com

The AIDA Concept Attention Interest Desire Action Model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message. Notes: The goal of any promotion is to get someone to buy a good or service. A classic model for reaching promotional goals is called the AIDA concept—attention, interest, desire, and action—the stages of consumer involvement. This model proposes that consumers respond to marketing messages in a thinking, feeling, and doing sequence.

AIDA and the Promotional Mix Awareness Interest Desire Action Advertising Very effective Somewhat Not Public Relations Sales Promotion Personal Selling On Line What role can the Internet play in the AIDA concept? Consider Exhibit 14.6 above. Recreate the table by deciding how effective you think the Internet would be as an advertising tool to create attention, interest, desire, and action. Continue to evaluate the Internet as a public relations tool, sales promotion tool, and personal selling tool. Notes: Exhibit 14.6 shows the relationship between the AIDA model and the promotional mix. For example, advertising is most useful in gaining attention for goods. In contrast, salespeople are more effective at creating customer interest and in creating desire. Public relations is best at gaining attention for a company, a good or service. Sales promotion’s greatest strength is in creating strong desire and purchase intent (action).

Product Life Cycle and the Promotional Mix Introduction Growth Maturity Decline Sales ($) Time Light Advertising; pre- introduction publicity Heavy use of Advertising; PR for awareness; sales promotion for trial Advertising’ PR, brand loyalty; personal selling for distribution Ads decrease; sales promotion; personal selling; reminder & persuasive AD/PR decrease; limited sales promotion; personal selling for distribution Notes: In the introduction stage, the basic goal of promotion is to inform the target audience. Advertising and public relations inform the target audience, while sales promotion encourages early trial. Personal selling gets retailers to carry the product. During the growth stage, advertising and public relations continue to be important, although sales promotion can be reduced because customers need fewer incentives to purchase. The promotional strategy is to emphasize the product’s differential advantage. Persuasive promotion is used to build and maintain brand loyalty. In the maturity stage, competition becomes fiercer, and persuasive and reminder advertising are emphasized. Sales promotion comes back into focus to try to increase market share. As the product enters the decline stage, all promotion, especially advertising, is reduced. Personal selling and sales promotion efforts may be maintained.

Push and Pull Strategies Push strategy: trade promotions and personal selling efforts push the product through the distribution channels. Pull strategy: producers use advertising and consumer sales promotions to generate strong consumer demand for products. Notes: Manufacturers may use aggressive personal selling and trade advertising to convince a wholesaler/retailer to carry and sell their merchandise. This is known as a push strategy. The wholesaler, in turn, pushes the merchandise forward by persuading the retailer to handle the goods. The retailer uses advertising and other forms of promotion to convince customers to buy the “pushed” products. At the other end is a pull strategy, which stimulates consumer demand to obtain product distribution. The manufacturer uses a pull strategy by focusing promotional efforts on end consumers and opinion leaders. The wholesaler then places an order for the “pulled” merchandise from the manufacturer. Consumer demand pulls the product through the channel of distribution. The Push and Pull strategies are diagrammed in Exhibit 14.8.

Advertising U.S. advertising spending exceeds $240 billion per year Industry employs only 284,000 Ad budgets of some firms exceed over $2 billion per year—over $6 million per day! Notes: Advertising, defined as any form of impersonal, paid communication in which the sponsor is identified, is a popular form of promotion especially for consumer packaged goods and services.

Advertising Strategy: message strategy Identify consumer benefits Develop compelling creative concept (The Big Idea) Appeals - meaningful credible & believable Distinctively expressed For further details about this topic see page506 10

How to bring the message to Life: message execution Choose style - how it is said Slice of life Fantasy Musical… Set tone - humour - Sexual - Fear- other? Select words - memorable and attention-getting Format elements - copy headline - illustration For further details about this topic see page506-507 11

Selecting Advertising Media Decide reach, frequency and impact. Choose media type Select specific media vehicles Decide on media timing Set timing pattern of ads For further details about this topic see page508 13

Advertising Evaluation Communication effects Sales effects Evaluation difficult - especially sales Sales vs. ad expense Experiments For further details about this topic see page511-512 17

Sales-Promotion Objectives More short-term sales Build long-term share Stimulate trial Switch from competitors Hold loyal customers Increase purchase quantity For further details about this topic see page516 21

Consumer-Promotion Tools Samples - trial amount of product Coupons - certificate to give buyer a saving Cash refund offers - reduction after purchase Premiums - free or low-cost with purchase Contests – Promotional events-chance to win For further details about this topic see page517-519 24

Public Relations: potential activities Press relations Public affairs Lobbying Investor relations Development For further details about this topic see page521 28

Public Relations: major tools Company news Speeches Special events Written materials Audiovisual production Corporate identity Public service activities Company web sites For further details about this topic see page523-524 29

Steps in Sales Force Management Designing sales force strategy and structure Recruiting and selecting salespeople Training sales people For further details about this topic see page540 Compensating salespeople Supervising salespeople Evaluating salespeople 4 4

Managing the Sales Force: sales-force structure Organize by Territory defines job - travel By Product expertise - overlap Customer or Industry focus - one face Complex structures For further details about this topic see page539-540 5 5

Managing the Sales Force: sales force size One of the most productive assets Also most expensive Size impacts costs Workload approach Account classes (A-B) Sales calls (24-48) Compute size For further details about this topic see page541-542 6 6

Recruiting and Selecting Salespeople Traits of the successful vary widely Enthusiasm, Persistence, Initiative, Self-Confidence, Job Commitment. Selection procedures specific to companies Tests -personal characteristics - references - previous employment - interviewer’s views For further details about this topic see page542-546 8 8

Training Sales People Training Goals Learn company and assimilate culture Technical information Know customers and industry competitors Average training period four months For further details about this topic see page546 9 9

Compensating Salespeople Design to motivate and direct activities Straight salary Straight commission Salary plus bonus Salary & commission Salary for stable income Variable part for results For further details about this topic see page546-547 10 10

Supervising Salespeople Average face-to-face selling time 30% Establish customer targets and call norms Set time spent on prospecting Annual call plan Time & duty analysis Salesforce automation For further details about this topic see page548-550 12 12

Motivating Salespeople Organizational Climate Opportunities rewards - value Sales Quotas achievable stretch goals Incentives sales meetings awards - contests For further details about this topic see page550-551 14 14

Evaluating Salespeople Potential benefits of Evaluation Expectations clear Gather Information Helpful feedback Motivation Evaluation Comparison with Peers Comparing with past sales Qualitative Evaluation For further details about this topic see page551-553 15 15

Steps in the Selling Process Prospecting Salesperson Identifies Qualified Potential Customers. Qualifying Process of Identifying Good Prospects and Screening Out Poor Ones. Preapproach Salesperson Learns as Much as Possible About a Prospective Customer Before Making a Sales Call. Approach Salesperson Meets the Buyer and Gets the Relationship Off to a Good Start.

Steps in the Selling Process Presentation Salesperson Tells the Product “Story” to the Buyer Using the Need-Satisfaction Approach. Handling Objections Salesperson Seeks Out, Clarifies, and Overcomes Customer Objections to Buying. Closing Salesperson Asks the Customer for an Order. Follow-Up Occurs After the Sale and Ensures Customer Satisfaction and Repeat Business.