Chapter 17 - PROMOTION

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What do these all have in common?

PROMOTION• is persuasive communication.• Product Promotion - persuade people to

select its products instead of competitors.

• Institutional Promotion – used to create favorable image for a business, help it advocate for a change or take a stand on trade or community issues.Companies maintain websites to provide

news, product & general information, & to answer questions. Its purpose is not to directly sell a product but it may help sales.

PROMOTION• Non-profit organizations use it to

educate public about an issue or trend or to advocate for change in a law or policy.

• Goals of Promotional activities are summarized by AIDA–Attract attention –build Interest and Desire–ask for Action

5 Types of Promotion in Promotional Mix

• Personal selling requires direct personal contact with the customer.

• Other 4 types of promotion (i.e. Advertising, Direct marketing, Sales Promotion, & Public Relations) communicate with customers in ways other than direct contact.

5 Types of Promotion in Promotional Mix

5 Types of Promotions in Promotional mixPersonal selling• door-to-door• Personal meetings• telemarketing• email• mail• expensive

Advertising• non-personal, one-way• print, TV, radio • product placements• websites, email, text messages

Public relations• media relations• publicity – free media• objectivity• news release

Direct marketing• Directed to target groups• In the form of mail, or email• sales or sales leads• incentive – special offer : coupon etc.• Incentive to call toll free #, website

Sales promotions• anything else• coupons, samples • point of sales displays

Promotional mix• target market• coordinate strategies• budget• results

Concept of Promotional Mix• Develop an effective promotional mix

to reach promotional goals.• How do companies choose promotional

mix? They use following steps:– Identify the target market– Determine the promotional strategies– Establish the budget– Allocate resources– Coordinate the campaign– Measure the results

Push – Pull concept • Manufacturers with products that have

weak brand identity might use push or pull strategy to reach customers.

• Push Policy– Get next-in-chain of Distribution to

carry your products (i.e. convince the retailer to stock the products on their limited shelf space)

– A manufacturer uses a mix of personal selling, advertising, buying discounts, sales promotions (especially at trade shows) to promote a product to large retailers that sell its products.

Push – Pull concept • Pull Policy

– Get consumers to want your product– Designed to create consumer interest

and demand.– Consumer demand can pull or encourage

retailers to carry a product.– Relies heavily on advertising geared

towards consumers, product samples, and in-store product displays and demonstrations

Types of Promotion• Sales promotions

– are incentives that encourage consumers to buy and try a new product

– Build awareness– Increase purchases by current customers– Reward loyalty

• 2 Types of Sales Promotions– Trade promotion (Business-to-Business or

B2B)– Consumer promotion (Business-to-

Consumer or B2C)

Trade Promotion• Targets manufacturers, wholesalers,

retailers• More $ spent on promoting to

businesses than to consumers• 5 Types of Trade Promotions

1) Promotional allowances• are cash payments or discounts given by manufacturers to wholesalers or retailers for performing activities to encourage sales.

• Result Retailers are more likely to promote the product to customers.

Trade Promotion• 5 Types of Trade Promotions….Continued.

2) Cooperative advertising• Manufacturer helps retailer by paying for

the cost of advertising its product locally.3) Slotting Allowances• Manufacturer pays a cash premium to a

retailer to help the retailer cover the costs of placing the manufacturer’s product on the shelves.

• Can range from a few thousands to millions of dollars per product.

• Pay for a retailer’s discount specials on a product, charges for store shelves, penalties for poor sales, store advertising, & display costs.

Trade Promotion• 5 Types of Trade Promotions….Continued.

4) Sales force promotions• are awards given to dealers &

employees who meet or exceed a sales quota

• Sales quota can apply to a specific period of time, such as one day, a month, or a year, for a particular product or line of products.

• Awards may include cash bonuses or prizes such as merchandise or travel awards.

Trade Promotion• 5 Types of Trade Promotions….Continued.

5) Trade shows and conventions• Showcase a particular line of

products.• Provide businesses opportunities to

introduce new products, encourage increased sales of

existing products, meet customers & partners in the

distribution chain, gain continued company & product

support.

Consumer Promotions• are inducements to buy or try a

product or service• Consumer Sales Promotion devices

include: – Coupons

• Entitles customers to cash discounts on goods or services

• Are placed on or inside product packages, or printed in newspapers and magazines

• Some get consumers to download & print electronic coupons online or redeem coupons by purchasing product online.

Consumer Sales Promotion devices Continued….–Premiums

• Are low-cost items given to consumers at a discount or for free.

• 3 types of popular consumer premiums–Factory Packs or in-packs – are free gifts

placed in product packages E.g. in cereal boxes.

–Traffic Builders – are low-cost premiums such as coffee mugs that are given away to consumers for visiting a new store or attending a special event.

–Coupon Plans – offer a premiums in exchange for labels or coupons obtained from a product or label. E.g. three soup-can labels in exchange for recipe book.

Consumer Promotions–Deals or Price Packs

• Offer short-term price reductions that are marked directly on the label or package.

• E.g. Two for one deal i.e. two similar or related products for the price of one Shampoo & Conditioner

– Incentives• Are used to promote products since they

create customer excitement & increase sales.

• Are higher-priced products earned & given away through contests, sweepstakes, & rebates.

Consumer Promotions– Incentives…Continued

• Contests – are games or activities that required demonstration of a skill.–E.g. scholarships, vacation, & money

• Sweepstakes – are games of chance and winners are picked randomly

• Rebates – are discounts offered by manufacturers to customers who purchase an item during a given period of time.

Consumer Promotions

–Product Samples• Is a free trial size of a product sent through the mail, distributed door-to-door, or given away at stores & trade shows.

•E.g. drug manufacturers often given samples to Doctors & Dentists so their patients can try the new products.

Consumer Promotions

–Sponsorship• Sponsoring company pays a fee for the right to promote itself & its products or services at or on a set location.

• Sponsors often negotiate the right to use its logos & names on retail products. E.g. Ted Rogers School of Management at Ryerson University

• Must be able to withstand public & media scrutiny

Consumer Promotions–Promotional Tie-Ins

• Also known as Cross-Promotion & Cross-selling campaigns

• Involves sales promotional arrangements between one or more retailers or manufacturers.

• Produce mutually beneficial results.• Is becoming increasingly popular on the Internet

Consumer Promotions–Product Placement

• Involves using a brand-name product in a movie, television show, sporting event, or even in a commercial for another product.–E.g. Use of Coca-Cola Drinks in American Idol

–E.g. Warner Bros movie “You’ve Got Mail” featured America Online (AOL) AOL paid between $3 & $6 million to Warner Bros for the international film exposure for its product and services.

Consumer Promotions–Loyalty Marketing Programs

• Also known as frequent buyer programs• Reward customers for being loyal to the

company.• Customer loyalty – means that customers

are so satisfied with a brand or retailer that they continue to buy that brand or company (e.g. retailer) even when they have others from which to choose.

• Airline industry – frequent flier program – reward customers with free air travel once they have accumulated a designated amount of travel miles.

Consumer Promotions

–Loyalty Marketing Programs…Continued•Online Loyalty Marketing

–The Internet search engine Yahoo! Awards points to web surfers who buy from certain retailer web sites.

–Then, web surfers can convert their points into frequent flier miles in the airline industry.

Consumer Promotions–Point-of-Purchase Displays

•Are displays designed primarily by manufacturers to hold & display their products.

•Are placed in high-traffic areas & promote impulse purchases.

•Purpose – is to stimulate sales & serve as in-store advertising.