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Promoting Products: Communication and Promotion Policy and Advertising

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1 Promoting Products: Communication and Promotion Policy and Advertising
Marketing for Hospitality and Tourism Kotler, Bowen and Makens Promoting Products: Communication and Promotion Policy and Advertising Chapter 13

2 Learning Objectives Discuss the process and advantages of integrated marketing communications in communicating customer value. Define the five promotion tools and discuss the factors that must be considered in shaping the overall promotion mix. Outline the steps in developing effective marketing communications. Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix.

3 Learning Objectives (cont.)
Define the roles of advertising in the promotion mix. Describe the major decisions in advertising, including setting objectives and budget; creating the advertising message; selecting advertising media; choosing media types, vehicles, and timing; and evaluating advertising.

4 The Promotion Mix Public Relations Personal Selling Sales Promotion
Advertising Personal Selling Direct Marketing Public Relations Sales Promotion The Promotion Mix A company’s total promotion mix—also called its marketing communications mix—consists of the specific blend of advertising, public relations, personal selling, sales promotion, and direct-marketing tools that the company uses to communicate customer value and build customer relationships persuasively Advertising Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor (See Slide 13) Sales promotion Short-term incentives to encourage the purchase or sale of a product or service (See Slide 14) Personal selling Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships (See Slide 15) Public relations Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events (See Slide 16) Direct marketing Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships—the use of direct mail, the telephone, direct-response television, , the Internet, and other tools to communicate directly with specific consumers (See Slide 17)

5 Integrated Marketing Communications
Several major factors are changing the face of today’s marketing communications Consumers are changing In this digital, wireless age, they are better informed and more communications empowered Rather than relying on marketer-supplied information, they can use the Internet and other technologies to seek out information on their own More than that, they can more easily connect with other consumers to exchange brand-related information or even to create their own marketing messages Marketing strategies are changing As mass markets have fragmented, marketers are shifting away from mass marketing More and more, they are developing focused marketing programs designed to build closer relationships with customers in more narrowly defined micromarkets Sweeping advances in communications technology are causing remarkable changes in the ways in which companies and customers communicate with each other Although television, magazines, newspapers, and other mass media remain very important, their dominance is declining The shift toward a richer mix of media and communication approaches poses a problem for marketers Today, more companies are adopting the concept of integrated marketing communications (IMC) Under this concept, the company carefully integrates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands Integrated marketing communications calls for recognizing all touchpoints where the customer may encounter the company and its brands IMC leads to a total marketing communications strategy aimed at building strong customer relationships by showing how the company and its products can help customers solve their problems

6 Elements in the Communication Process
Media Sender Encoding Message Decoding Receiver Noise To communicate effectively, marketers need to understand how communication works Two of these elements are the major parties in a communication—the sender and the receiver. Another two are the major communication tools—the message and the media. Four more are major communication functions—encoding, decoding, response, and feedback. The last element is noise in the system Sender The party sending the message to another party Encoding The process of putting thought into symbolic form Message The set of symbols that the sender transmits Media The communication channels through which the message moves from the sender to the receiver Decoding The process by which the receiver assigns meaning to the symbols encoded by the sender Receiver The party receiving the message sent by another party Response The reactions of the receiver after being exposed to the message Feedback The part of the receiver's response communicated back to the sender Noise The unplanned static or distortion during the communication process, which results in the receiver getting a different message than the one the sender sent Feedback Response

7 Steps in Developing Effective Communication
Determine the Communication Objectives Design the Message Identify the Target Audience Select the Communication Channels Select the Message Source Collect Feedback Marketers must do the following: Identify the target audience, determine the communication objectives, design the message, select the communication channels, select the message source, and collect feedback Identifying the Target Audience A marketing communicator starts with a clear target audience in mind The audience may be potential buyers or current users, those who make the buying decision, or those who influence it The audience may be individuals, groups, special publics, or the general public The target audience heavily affects the communicator’s decision on what will be said, how it will be said, when it will be said, where it will be said, and who will say it Determining the Communication Objective Once a target audience has been defined, the marketing communicator must decide what response is sought In most cases, the final response is purchase The marketing communicator needs to know where the target audience stands in relation to the product and to what state it needs to be moved Designing the Message Having defined the desired audience response, the communicator turns to developing an effective message Ideally, the message should get attention, hold interest, arouse desire, and obtain action (See Slide 9) Selecting Communication Channels The communicator must now select channels of communication The two broad types of communication channels are personal and nonpersonal (See Slide 10) Selecting the Message Source The message’s impact on the audience is also affected by how the audience views the sender Messages delivered by highly credible sources are persuasive What factors make a source credible? The three factors most often found are expertise, trustworthiness, and likability Expertise is the degree to which the communicator appears to have the authority needed to back the claim Trustworthiness is related to how objective and honest the source appears to be Likability is how attractive the source is to the audience Collecting Feedback After sending the message, the communicator must research its effect on the target audience This involves asking the target audience whether they remember the message, how many times they saw it, what points they recall, how they felt about the message, and their past and present attitudes toward the product and company

8 Buyer Readiness States
Knowledge Liking Awareness Preference Conviction Purchase The target audience may be in any of six buyer readiness states: awareness, knowledge, liking, preference, conviction, or purchase Awareness The communicator must be able to gauge the target audience’s awareness of the product or organization The audience may be totally unaware of it, know only its name, or know one or a few things about it If most of the target audience is unaware, the communicator tries to build awareness, perhaps by building simple name recognition Knowledge The target audience might be aware of the company or product but know little else Liking If target audience members know the product, how do they feel about it? Preference A target audience might like the product but not prefer it to others In this case the communicator must try to build consumer preference The communicator promotes the product’s quality, value, performance, and other features Conviction A target audience might prefer the product but not develop a conviction about buying the product Marketers have a responsibility to turn favorable attitudes into conviction because conviction is closely linked with purchase Purchase Finally, some members of the target audience might have conviction but not quite get around to making the purchase They may wait for more information or plan to act later The communicator must lead these consumers to take the final step Actions might include offering the product at a low price, offering a premium, or letting consumers try it on a limited basis

9 Designing the Message Message Content Message Message Format Structure
In putting the message together, the marketing communicator must solve three problems: what to say (message content), how to say it logically (message structure), and how to say it symbolically (message format) Message Content The communicator has to figure out an appeal or theme that will produce a desired response The three types of appeals are rational, emotional, and moral Rational appeals relate to audience self-interest Emotional appeals attempt to provoke emotions that motivate purchase Moral appeals are directed to the audience’s sense of what is right and proper Message Structure The communicator must also decide how to handle three message structure issues The first is whether to draw a conclusion or leave it to the audience The second message structure issue is whether to present a one- or two-sided argument The third message structure issue is whether to present the strongest arguments first or last Message Format The communicator also needs a strong format for the message To attract attention, advertisers can use novelty and contrast, eye-catching pictures and headlines, distinctive formats, message size, position, color, shape, and movement If the message is to be carried over the radio, the communicator has to choose words, sounds, and voices

10 Communication Channels
Personal Nonpersonal The two broad types of communication channels are personal and nonpersonal Personal Communication Channels In personal communication channels, two or more people communicate directly with each other They might communicate face to face, on the phone, via mail or , or even through an Internet chat Personal communication channels are effective because they allow for personal addressing and feedback. Buzz marketing involves cultivating opinion leaders and getting them to spread information about a product or service to others in their communities Nonpersonal Communication Channels Nonpersonal communication channels are media that carry messages without personal contact or feedback They include media, atmospheres, and events Major media consist of print media (newspapers, magazines, direct mail), broadcast media (radio and television), display media (billboards, signs, posters), and online media ( , Web sites, and online social and sharing networks) Atmospheres are designed environments that create or reinforce the buyer’s leanings toward purchasing a product Events are occurrences staged to communicate messages to target audiences Public relations departments arrange press conferences, grand openings, public tours, and other events to communicate with specific audiences

11 Setting the Total Promotion Budget
Methods Affordable Percentage of Sales Competitive Parity Objective and Task One of the hardest marketing decisions facing companies is how much to spend on promotions How do companies determine their promotion budget? Four common methods are used to set the total budget for advertising: The Affordable Method Many companies use the affordable method They set a promotion budget at what they think the company can afford Unfortunately, this method of setting budgets completely ignores the effect of promotion on sales volume It leads to an uncertain annual promotion budget, which makes long-range marketing planning difficult Although the affordable method can result in overspending on advertising, it more often results in underspending Percentage of Sales Method Many companies use the percentage of sales method, setting their promotion budget at a certain percentage of current or forecasted sales, or they budget a percentage of the sales price Some firms use this method because it is easy However, the percentage of sales method has little justification It wrongly views sales as the cause of promotion rather than as the result It may prevent increased spending Long-range planning is difficult It does not provide a basis for choosing a specific percentage Competitive Parity Method Other companies use the competitive parity method, setting their promotion budgets to match competitors’ outlays There are no grounds for believing that competition has a better idea of what a company should be spending on promotion Also, no evidence indicates that budgets based on competitive parity prevent promotion wars. Objective and Task Method The most logical budget setting method is the objective and task method (See Slide 12)

12 Objective and Task Method
Define Specific Objectives Determine Tasks to Achieve Objectives Estimate the Costs of Performing Tasks The most logical budget setting method is the objective and task method Using this, marketers develop their promotion budgets by: Defining specific objectives Determining tasks that must be performed to achieve these objectives Estimating the costs of performing them The sum of these costs is the proposed promotional budget This method forces management to spell out its assumptions about the relationship between dollars spent and promotional result It is also the most difficult method to use because it can be hard to determine which tasks will achieve specific objectives With the objective and task method, the company sets its promotion budget based on what it wants to accomplish

13 Advertising Benefits Seems Legitimate Allows Repetition
Builds Long-Term Image Low Cost per Exposure Drawbacks Impersonal One-Way Communication Easily Ignored Can Be Very Costly Each promotional tool; advertising, personal selling, sales promotion, public relations and direct marketing has unique characteristics and costs Advertising Benefits Advertising’s public nature suggests that the advertised product is standard and legitimate Advertising also allows the seller to repeat a message many times Advertising can be used to build a long-term image for a product and also stimulate quick sales Advertising can reach masses of geographically dispersed buyers at a low cost per exposure Drawbacks Although it reaches many people quickly, advertising is impersonal and cannot be as persuasive as a company salesperson Advertising is able to carry on only a one-way communication with the audience The audience does not feel it has to pay attention or respond Advertising can be very costly

14 Personal Selling Benefits Builds Buyer Preference
Fosters Relationships Drawbacks Long-Term Commitment Most Expensive Tool Each promotional tool; advertising, personal selling, sales promotion, public relations and direct marketing has unique characteristics and costs Personal Selling Benefits Most effective tool at certain stages of the buying process, particularly in building buyer preference, conviction, and purchase Involves personal interaction between two or more people Lets all kinds of relationships spring up, ranging from a matter-of-fact selling relationship to a deep personal friendship The buyer usually feels a greater need to listen and respond Drawbacks A sales force requires a longer-term company commitment than advertising The company’s most expensive promotion tool

15 Sales Promotion Benefits Attract Customer Attention
Encourage Immediate Purchase Can Boost Sagging Sales Drawbacks Effects are Short-Lived Short-Term May Not Build Brand Preference Each promotional tool; advertising, personal selling, sales promotion, public relations and direct marketing has unique characteristics and costs Sales Promotion Sales promotion includes an assortment of tools, coupons, contests, cents-off deals, premiums, and others Benefits They attract consumer attention and provide information that may lead the consumer to buy the product Advertising says “buy our product.” Sales promotion says “buy it now.” Sales promotion can be used to dramatize product offers and to boost sagging sales Drawbacks Its effects are usually short lived, however, and are not effective in building long-run brand preference

16 Public Relations Public Relations Better Reach More Believable
Each promotional tool; advertising, personal selling, sales promotion, public relations and direct marketing has unique characteristics and costs Public Relations Public relations is more believable Public relations can reach many prospects who avoid salespeople and advertisements

17 Direct Marketing Nonpublic Immediate Customized Interactive
Each promotional tool; advertising, personal selling, sales promotion, public relations and direct marketing has unique characteristics and costs Direct Marketing Although there are many forms of direct marketing, they all share four distinctive characteristics Nonpublic The message is normally directed to a specific person Immediate Messages can be prepared very quickly Customized Messages can be tailored to appeal to specific consumers Interactive It allows a dialogue between the marketing team and the consumer, and messages can be altered depending on the consumer’s response

18 Promotion Mix Strategies
Type of Product & Market Push vs. Pull Strategy Buyer Readiness State Product Life-Cycle Stage Companies consider many factors when developing their promotion mix, including the following: type of product and market, push versus pull strategy, buyer readiness state, and product life-cycle stage Type of Product and Market The importance of different promotion tools varies among consumers and commercial markets When hospitality firms market to consumer markets, they spend more on advertising and sales promotion and often very little on personal selling Hospitality firms targeting commercial organizations spend more on personal selling Push versus Pull Strategy The promotional mix is heavily affected by whether a company chooses a push or pull strategy Push strategy involves “pushing” the product through distribution channels to final consumers A push strategy provides an incentive for channel members to promote the product to their customers or push the product through the distribution channels Using a pull strategy, a company directs its marketing activities (primarily advertising and consumer promotion) toward final consumers to induce them to buy the product Thus, under a pull strategy, consumer demand “pulls” the product through the channels Buyer Readiness State Promotional tools vary in their effects at different stages of buyer readiness Advertising, along with public relations, plays a major role in the awareness and knowledge stages Product Life-Cycle Stage The effects of different promotion tools also vary with stages of the product life cycle

19 Major Decisions in Advertising
Marketing management must make five important decisions in developing an advertising program Setting the Objectives The first step in developing an advertising program is to set advertising objectives, which should be based on information about the target market, positioning, and marketing mix Advertising objectives can be classified by their aim: to inform, persuade, or remind (See Slide 16) Setting the Advertising Budget After determining advertising objectives, a company can establish an advertising budget for each product The role of advertising is to affect demand for a product The company wants to spend the amount needed to achieve the sales goal (See Slide 17) Developing Advertising Strategy Advertising Strategy consists of two major elements: creating advertising messages and selecting advertising media Creating the Advertising Message No matter how big the budget, advertising can succeed only if advertisements gain attention and communicate well Good advertising messages are especially important in today's costly and cluttered advertising environment (See Slides 18-19) Choosing Among Major Media Steps The major steps in media selection are (1) deciding on reach, frequency, and impact; (2) choosing among major media types; (3) selecting specific media vehicles; and (4) deciding on media timing (See Slide 20)

20 Advertising Objectives
Informative Persuasive Reminder Advertising objectives can be classified by their aim: to inform, persuade, or remind Informative advertising Used heavily when introducing a new product category and when the objective is to build primary demand Persuasive advertising Becomes more important as competition increases and a company’s objective becomes building selective demand Some persuasive advertising has become comparison advertising, which compares one brand directly or indirectly with one or more other brands Advertisers should use comparative advertising with caution All too often, such ads invite competitor responses, resulting in an advertising war that neither competitor can win Reminder advertising Important for mature products because it keeps consumers thinking about the product

21 Setting an Advertising Budget
Stage in the Product Life Cycle Competition and Clutter Market Share The advertising budget also has some specific factors that should be considered when setting a budget Stage in the product life cycle New products typically need large advertising budgets to build awareness and gain consumer trial Mature brands usually require lower budgets as a ratio to sales Competition and clutter In a market with many competitors and heavy advertising support, a brand must be advertised more frequently to be heard above the noise of the market Market share High-market-share brands usually require greater advertising expenditures as a percentage of sales than do low-share brands Building a market or taking share from competitors requires larger advertising budgets than maintaining current share Advertising frequency Larger advertising budgets are essential when many repetitions are needed to present the brand’s message Product differentiation A brand that closely resembles others in its product class requires heavy advertising to set it apart When a product differs greatly from those of competitors, advertising can be used to communicate differences to consumers Advertising Frequency Product Differentiation

22 Creating the Advertising Message
Message Strategy Message Execution Message Decisions Message Generation Message Evaluation and Selection Just to gain and hold attention, today's advertising messages must be better planned, more imaginative, more entertaining, and more emotionally engaging Message Strategy The first step in creating effective advertising messages is to plan a message strategy—the general message that will be communicated to consumers The purpose of advertising is to get consumers to think about or react to the product or company in a certain way Developing an effective message strategy begins with identifying customer benefits that can be used as advertising appeals Ideally, the message strategy will follow directly from the company's broader positioning and customer value strategies Message Execution The impact of the message depends on what is said and how it is said: message execution The advertiser has to put the message across in a way that wins the target market’s attention and interest (See Slide 19) Message Decisions A large advertising budget does not guarantee a successful advertising campaign Studies have shown that creative advertising messages can be more important than the number of dollars spent No matter how big the budget, advertising can succeed only if its message gains attention and communicates well Message Generation This characteristic of services in general poses genuine challenges for message creation As the editor of the Cornell Quarterly pointed out, “An advertisement can depict a product—a food item, a desk, an exercise machine—but how does one illustrate a hotel stay?” Message Evaluation and Selection The advertiser must evaluate possible appeals on the basis of three characteristics Messages should be meaningful Pointing out benefits that make the product more desirable or interesting to consumers Appeals should be distinctive They should tell how the product is better than competing brands Believable Making message appeals believable is difficult because many consumers doubt the truth of advertising

23 Message Execution Slice of Life Lifestyle Fantasy Mood or Image
Musical Personality The advertising agency’s creative staff must find a style, tone, words, and format for executing the message Any message can be presented in different execution styles, such as the following Slice of life Shows one or more people using the product in a normal setting Lifestyle Shows how a product fits with a lifestyle Fantasy Creates a wonder world around the product or its use Mood or image Builds a mood or image around the product, such as beauty, love, or serenity No claim is made about the product except through suggestion Musical Shows one or more people or cartoon characters singing a song about the product Certain cultures seem particularly receptive to the use of theme songs and sing-along melodies in advertisements Personality Symbol creates a character that represents the product Technical expertise Shows the company’s expertise with the product Scientific evidence Presents survey or scientific evidence that the brand is better or better liked than one or more other brands Testimonial evidence Features a highly believable or likable source endorsing the product Technical Expertise Scientific Evidence Testimonial Evidence

24 Major Steps in Media Selection
Deciding on Reach, Frequency & Impact Choosing Among Major Media Types Selecting Specific Media Vehicles Deciding on Media Timing Deciding on Reach, Frequency, and Impact To select media, the advertiser must decide what reach and frequency are needed to achieve advertising objectives Reach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time Frequency is a measure of how many times the average person in the target market is exposed to the message Choosing Among Major Media Types The media planner has to know the reach, frequency, and impact of each major media type The major media types, in order of advertising volume, are newspapers, television, direct mail, radio, magazine, and outdoor Each medium has advantages and limitations Selecting Specific Media Vehicles The media planner must now choose the best specific media vehicles within each general media type The media planner must thus balance media cost measures against several media impact factors First, costs should be balanced against the media vehicle’s audience quality Second, the media planner should consider audience attention Third, the planner assesses the vehicle’s editorial quality Deciding on Media Timing The advertiser must also decide how to schedule advertising over the course of a year Finally, the advertiser must choose the pattern of the ads Continuity means scheduling ads evenly within a given period Pulsing means scheduling ads unevenly over a given period

25 Evaluating Advertising Effectiveness
Measure Communication Effect Sales Effect Awareness Effect Managers of advertising programs should regularly evaluate the communication and sales effects of advertising Measuring the Communication Effect Measuring the communication effect reveals whether an ad is communicating well Measuring the Sales Effect The sales effect of advertising is often harder to measure than the communication effect One way to measure sales effect is to compare past sales with past advertising expenditures Another is through experiments Measuring the Awareness Effect If the objective of the advertising is to inform, then conducting a pre- and post-test of the target markets awareness of the product or brand is often used as a method of measuring the effect of an advertising campaign

26 Key Terms Advertising Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Atmosphere Designed environments that create or reinforce a buyer’s leanings toward consumption of a product. Continuity Scheduling ads evenly within a given period. Copy testing A process performed before or after an ad is printed or broadcast. Direct marketing Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships: the use of direct mail, the telephone, direct- response television, , the Internet, and other tools to communicate directly with specific consumers. Direct rating The advertiser exposes a consumer panel to alternative ads and asks them to rate the ads.

27 Key Terms (cont.) Events Occurrences staged to communicate messages to target audiences, such as news conferences or grand openings. Informative advertising Advertising used to inform consumers about a new product or feature to build primary demand. Integrated marketing communications Under this concept the company carefully integrates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands. Laboratory test This test uses equipment to measure consumers’ physiological reactions to an ad: heartbeat, blood pressure, pupil dilation, and perspiration. Media Nonpersonal communications channels, including print media (newspaper, magazines, direct mail), broadcast media (radio, television), and display media (billboards, signs, posters). Personal selling Personal presentation by the firm’s sales force to make sales and build customer relationships.

28 Key Terms (cont.) Portfolio tests Consumers view or listen to a portfolio of advertisements, taking as much time as they need. Promotion mix The specific mix of advertising, personal selling, sales promotion, and public relations a company uses to pursue its advertising and marketing objectives. Public relations Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Pulsing Scheduling ads unevenly over a given period. Recall tests The advertiser asks people who have been exposed to magazines or television programs to recall everything they can about the advertisers and products that they saw. Recognition tests The researcher asks readers of, for instance, a given issue of a magazine to point out what they have seen. Reminder advertising Advertising used to keep consumers thinking about a product. Sales promotion Short-term incentives to encourage the purchase or sale of a product or service.

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