Chapter 9 Promoting Products: Communication and Promotion Policy and Advertising

Key Terms Informative advertising Media Promotion mix Reminder advertising Atmosphere Channel conflict Events

“I don’t know who you are. I don’t know your company “I don’t know who you are. I don’t know your company. I don’t know your company’s product. I don’t know what your company stands for. I don’t know your company’s customers. I don’t know your company’s record. I don’t know your company’s reputation. Now— what was it you wanted to sell me?” - McGraw – Hill Publications

Chapter Objectives Outline the six steps in developing effective communications Define the ways of setting a total promotional budget Explain each promotional tool and the factors in setting the promotion mix Describe the major decisions in advertising

Promotion Mix A promotion mix is a company’s total marketing communications program and it consists of a specific blend of: Advertising Sales Promotions Public Relations Personal Selling

The Communication Process Identify the target audience Determine the communication objective

Buyer Readiness States

Communication Strategy The communication process has 6 broad stages To whom to say it Why to say it What to say How to say it How often to say it Where to say it

Communications Strategy To whom to say it Define the target market Research Wants and needs clearly identified Why say it Expect it to have a certain effect What needs to be accomplished

Communications Strategy What to say Methods chosen need to achieve the strategic objective Consumer adoption process model How to say it The execution stage Communication that most accurately accomplishes the goals consistent with the target market

Communications Strategy Where to say it Using the various components of the communications mix Select appropriate media How often to say it Consumer-driven and budget-driven

Communications Strategy Push/pull strategies Push strategy Marketing communication efforts to intermediaries, who then push the product to their customer base Pull strategy Marketing communication efforts directly to the consumer, who purchases the product directly or through an intermediary Both are common in the communications industry

Push vs. Pull Strategy ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Word of Mouth (WOM) Communication Most powerful form of communication Products cannot be tested before purchase so outside advice is important Elements of the communication mix can influence WOM In this way, what we do has more impact than what we say

Word of Mouth (WOM) Communication Impact of word of mouth Should give people something interesting to talk about Create communities and networks to connect people Work with influential communities Create advocate programs Blogs

Word of Mouth (WOM) Communication Measuring word of mouth Lifetime value of a customer based on: Gross profit on an average purchase Average number of purchases a customer makes each year Average number of years customer will continue to purchase Probability that customer will continue to purchase

The Communication Process Design the message Message Content Message Structure Message Format Message Source

The Communication Process Select Communication Channels Personal Communication Channels Non-personal Communication Channels Select the Message Source Measure Communication Results

Establishing the Total Marketing Communications Budget Affordable Method – based on what the company can afford Percentage of Sales Method – based on a percentage of current or forecasted sales Competitive Parity Method – based on competitors’ budgets Objective and Task Method – based on objectives, tasks, and estimated costs

Nature of Each Promotion Tool Advertising Personal Selling Sales Promotion Public Relations Direct Marketing Reach Many Buyers, Repeat Message Many Times, Impersonal, Expensive Personal Interaction, Relationship Building, Most Expensive Promotional Tool Wide Assortment of Tools, Rewards Quick Response, Efforts Short-Lived Very Believable, Dramatize a Company or Product, Underutilized Nonpublic, Immediate, Customized, Interactive

Factors in Setting the Promotion Mix Type of Product and Market Push vs. Pull Strategy Buyer Readiness State Product Life-Cycle Stage

Advertising Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor Role of advertising To inform, create awareness in, and attempt to persuade new customer and reinforce the buying behavior of present customers For hospitality, most important to create and maintain awareness of the firm, or promote a particular component or service

Advertising Ideally, will accomplish: Tangibilize the service element Promise a benefit that can provide solutions to problems Differentiate the property from that of the competition Have positive effects on employees who must execute the promises Capitalize (benefit) on word of mouth

Advertising Merchandising Collateral material A tool used in the marketing communications mix to reach identified target markets Primarily an in-house marketing technique used to stimulate sales of additional products or services on premise A long-term goal is increasing customer satisfaction Collateral material Promotional materials such as brochures, direct mail, and other forms of advertising that are used to inform customers and create interest

Merchandising Basic rules of merchandising: Have a purpose beyond sales projections Compatibility and consistency Practicality Consistency Simplicity

Merchandising Examples of good merchandising Business centers in hotels that cater to business travelers Pizza on finer hotels’ room service menus Mini bars in guest rooms

Major Decisions in Advertising Setting the Objectives Setting the Advertising Budget Message Decisions Media Decisions Campaign Evaluation

Setting the Objectives Informative advertising is used to inform consumers about a new product or feature to build primary demand Persuasive advertising is used as competition increases and a company’s objective becomes building selective demand Reminder advertising is used for mature products since it keeps consumers thinking about the product

Major Advertising Decisions

Setting the Advertising Budget Specific factors to be considered when setting an advertising budget: Stage in the product life cycle Competition Market share Advertising frequency Product differentiation

Setting the Advertising Budget General factors to consider: Strategic versus Tactical Budgets Overall Promotional Budget Consistency Opportunities to Stretch the Budget The Final Budget

Message Decisions Message Generation Message Evaluation and Selection Message Execution

Media Decisions Deciding on Reach, Frequency, and Impact Choosing Among Major Media Types Selecting Specific Media Vehicles Deciding on Media Timing

Profiles of Major Media Types ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

Public Relations (PR) PR effort can steer in a positive or negative way Press release is a prepared document for release to selected media containing information or “news” about a firm

Public Relations Undertaking public relations An ongoing task that is an important part of the marketing planning Happens at corporate, property or unit level Employee and management belonging to public organizations contributes in some manner to PR Planning public relations Identify a purpose and know the target markets Consider the benefit to the customer Know the correct media to reach the target market prospects Establish relationships with editors and writers and other media

Public Relations Public relations guidelines: Budget and spend wisely Use reputable PR personnel or firms Have a written PR plan PR people must understand your plan Have a consistent, ongoing program Generate innovative ideas Great PR depends on creative management

Publicity Publicity is created to generate continued positive coverage of a firm Have a targeted purpose and an evaluation post-publicity Publicity helps with promotions Starts with inviting media to cover a specific event Press releases of background information are made available at the event PR works the event, pitching to the media Follow-up calls and thank you Program evaluation Make provisions for the unexpected; crisis management teams

Discussion Questions Find several advertisements for a hospitality or travel organisation. Then visit their web site. Is the communication provided on the web site congruent with and support their print adverstising and broadcast advertising? Explain your answers. Recently, a number of restaurants have shifted some of their promotional budget from advertising to public relations. What benefits does public relations offer that would make the restaurants spend more?

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