Promotional Mix n Advertising – paid form of nonpersonal communication by an identified sponsor n Personal Selling – interpersonal communication with potential customers for an identified sponsor n Public Relations – nonpaid, nonpersonal communication without a sponsor n Sales Promotions – activities not covered in other three used to stimulate consumer demand Chapter 10.1

Communications Model Noise SenderMessageChannelReceiver Feedback Chapter 10.2

Functions of Advertising and Promotion n Present information to the consumer n Reinforce consumer behavior n Induce first-time patronage n Enhance the image of the firm Chapter 10.3

Promoting over the Product Life Cycle n Introduction – attract innovators and build volume using all the elements of the promotional mix n Growth – use advertising and personal selling to build brand recognition and differentiate from competition n Maturity – maintain customer base using reminder advertising and use sales promotions as short-term inducements for customers to switch brands n Decline – keep loyal customers with limited advertising and sales promotions Chapter 10.4

Value of Promotional Budgets n To provide a detailed projection of future expenditures n To provide both short- and long-range planning guides for management n To provide a method for monitoring and controlling promotional expenses Chapter 10.5

Budgeting Methods n Percentage-of-sales – simple, ties advertising to sales, most popular method n Desired objective – best theoretically, forces management to consider objectives, difficult to apply n Competitive parity – simple, focuses on competition, may be too reactive, assume competitors know what they are doing n All-you-can-afford – last resort, may be only viable option for small operations after meeting obligations Chapter 10.6

Chapter 10.7

Forms of Advertising n National Advertising n Local Advertising n Cooperative Advertising Chapter 10.8

Advertising Strategy Development n Focus on objectives n Choose a target audience n Determine key consumer benefits n Be able to support claims n Use tone and manner to create a “personality” Chapter 10.9

Developing a Central Appeal n Must offer some value to the customer n Must be distinctive n Must be believable n Should be simple Chapter 10.10

Keys to Successful Advertising n Allocate enough time n Allocate adequate resources n Analyze the firm’s position n Analyze the market n Carefully select the media n Form an advertising plan Chapter 10.11

Campaign Checkpoints n Maintain visual similarity n Maintain verbal similarity n Maintain similarity of sound n Maintain similarity of attitude Chapter 10.12

Chapter 10.13

Evaluating an Advertising Campaign n Copy testing n Inquiry and sales n Coupons and split runs n Sales tests n Consumer testing of awareness, recall, and attitude Chapter 10.14

Using an Advertising Agency n Advantages –Agency can increase the effectiveness of the advertising campaign –Can handle special media production requirements –Staff of specialists –Closer contacts with media representatives –Consulting and marketing research n Disadvantages –Expensive –May duplicate expertise or services already available –Loss of control Chapter 10.15

Advertising Agency Services n Study client’s product in relation to competition n Analyze current and potential markets n Provide leadership and direction in selecting media n Formulate a detailed plan n Execute the plan n Verify placements n Evaluate campaign effectiveness Chapter 10.16

Agency Compensation n Commissions from media n Fees or retainers paid by client n Service charges for creative work n Markups on outside purchases n Trade-outs Chapter 10.17

Effects of Advertising n Social and Ethical Criticisms –Can be misleading or deceptive –Can be offensive or in poor taste –Encourages materialism –Encourages people to buy things they don’t need n Economic Effects –Effects on consumer choice –Effects on competition –Effects on product costs and prices Chapter 10.18