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Promotion“Spread the Word”

Purpose of Promotion

• The purpose of promotion is to tell customers about a company’s goods, services, images, or ideas and persuade them to buy or to form an opinion. A company may have an outstanding product which is priced just right for the market, but if customers don’t know about the product, no sales will be made. Promotion, therefore, consists of communication activities that inform potential customers about goods, services, images, or ideas to achieve a desired outcome.

Purpose of Promotion

• Businesses use a variety of communication techniques to sendtheir promotional messages to customers. They communicate with customers through advertising, personal selling, publicity, and sales promotion.

Promotional Mix

Mars uses a number ofdifferent methods—and spokes-candies—to promote M&M’s.

The specific combination, or blend, of marketing communication channels that a business uses to send its messages to customers is known as the promotional mix. Each business’s promotional mix is unique, based on a specific set of circumstances and product.

Promotional Mix

• A local restaurant, for example, might decide that a combination of newspaper advertising, coupons, and radio commercials is the best promotional mix for it to use. A Fortune-500 company, on the other hand, may choose to promote its products via Facebook,national television commercials, magazine advertisements, and a NASCAR racing team sponsorship. Regardless of the exact blend ofthe promotional mix, the goal is always the same—to communicate effectively with customers.

Out of Home Media

• An electrical sign located in a high-traffic area is an effective out-of-home media. Out-of-home media also include billboards, painted bulletins, blimps, and hot-air balloons.

Find the Right Blend

• Successful marketers carefully blend the elements of the promotional mix for the best possible results. The promotional mix elements are: advertising, personal selling, publicity, and sales promotion.

Advertising

• The most visible element of the promotional mix is advertising—any paid form of non-personal presentation of ideas, images, goods, or services. Advertising helps customers to “put a face with a name,” no matter whether it’s a product, a company, an organization, or an idea.

• Businesses often use advertising to encourage short-term sales, build product awareness, and develop a brand image.

Advertising

Advertising works best when:• Product awareness is low (new product)• Product features are not obvious to consumers• Product needs to be differentiated from those

of the competition• Discretionary incomes are high (consumers’ $$

$)• Overall industry sales are rising

Advertising

Advertising has several advantages. • It can reach a large audience in a broad geographic

area, and since many people receive the same message, the per contact cost of advertising is low.

• Unfortunately, many of these same individuals tune the ads out, due to the info. overload prevalent in today’s society. Even if they do pay attention to ads, they may need to see an ad 7 times or more before it takes on meaning. To top it off, advertising is typically NOT good for delivering complicated messages.

Advertising

• Advertising can be delivered to consumers through a variety of mass media. Examples include:

• television and radio commercials• print ads in newspapers and magazines• out-of-home ads such as billboards and car wraps• catalogs, direct mail, product placement, banner ads,

paid listings, search engine listings, pay-per-click links, and email.

Advertising - Stereotypes

• A television commercial depicts a woman mopping the kitchen with a new floor cleaner. A stereotype is a set image or an assumption about a person or thing. Until recent decades, many people associated homemaking or house cleaning as a female's primary responsibility. However, it is not generally true today. With more women in the workforce, household and child care (e.g., a man pouring orange juice for children), responsibilities are often shared with males. Many males now have successful careers as chefs.

• An ad campaign that presents a variety of people suggests all types of people drink milk. Therefore, the print ads aren't engaging in stereotyping. Using a well-known athlete to promote continuing education does not necessarily promote stereotypes.

Personal Selling

• Personal selling is the form of promotion that determines client needs/wants and responds through planned, personalized communication that influences purchase decisions and enhances future business opportunities.

• At its core, personal selling is all about building relationships with customers. It’s only natural that the starting point for personal selling is determining client needs and wants. By starting with the customer in mind, salespeople can provide the goods or services that will best satisfy that person and gain repeat business.

Personal Selling

• Selling is personalized communication, which means it involves interaction between the customer and the salesperson. This interaction can take place face-to-face, by telephone, or by email.

• Regardless of the means of communication, personal selling is designed to influence purchase decisions—in other words, to make a sale. However, it should not be a strong arm tactic or simply an attempt by the salesperson to “make a buck.”

Personal Selling• On a per contact basis, personal selling can be the most expensive

form of promotion. However, the advantages that it has over advertising usually make it worth the cost. These advantages include immediate feedback and flexibility. By watching or listening to a client’s reactions to a sales presentation, the salesperson can learn what the individual likes or dislikes about a product.

• As a result, the salesperson can tailor the presentation to appeal to the particular individual. Another benefit of personal selling is many customers view it as being more credible than advertising. It’s no surprise that personal selling is the most effective form of promotion.

Personal Selling

• Products sold to industrial users are usually complex, technical, expensive, and require demonstration. Because of these characteristics, personal selling should be emphasized. Sales promotion, publicity, and advertising could be used to support personal selling.

Personal selling is ideal for delivering complicated

messages and explaining highly specialized technical products.

Publicity

• Publicity is an identity-building tactic defined as any non-personal presentation of ideas, goods, or services that is NOT PAID FOR by the company/individual that benefits from or is harmed by it. There is little or no direct interaction between customers and the company when the promotional message is received.

• Because publicity is often distributed via 3rd party sources such as the news media, businesses have little control over the message presented to customers, the timing of that message, the location in which the customers receive the message, etc.

Publicity

• Due to the fact that businesses have little control over these messages, and also because the company does not pay to have its message delivered, customers typically consider the information gained through publicity to be more credible. They pay close attention to publicity and view it as news.

• Publicity can be used to build goodwill toward a company, as well as develop a positive image of the business.

Publicity• Publicity comes in many forms. For instance,

favorable press releases and news stories can help to promote a new product. By appearing on a TV talk show, an actor or director can publicize her/his new movie.

• Mention of a company’s charitable activities or sponsorships in print or broadcast media can help build good feelings toward the business.

Publicity

• Online publicity – both positive and negative—can take the shape of testimonials from actual customers on the company web site, blog entries across the Web, company-written white papers, conversations on social media sites, and customer ratings of and/or comments about the company’s products on independent web sites.

• The Internet is an integral part of many people’s lives, so publicity about a product or company online can have a real impact on customers’ actions.

Company News Release – Publicity

• Publicity is a non-personal form of promotion that is not paid for by the company or individual that receives it.

• A news release would be prepared by the company but presented at the publisher's expense. Direct mail, a billboard, and a company TV commercial are examples of advertising – NOT free publicity.

Mass Media• Mass media reach a lot of people at the same time.

Included are print, broadcast, direct mail, out-of-home, and other media. It can literally reach people around the world at one time.

• Mass media are also capable of reaching a specific audience, meeting the needs of many businesses, and presenting large amounts of promotion, but it is their ability to reach masses of people that is responsible for their name.

Sales Promotion

Have you ever:• Seen a window display?• Used a coupon at a store?• Watched a product demonstration?• Received an instant rebate?• Sampled food products at a grocery store?

Sales Promotion

• If so, you are familiar with sales promotion: promotional activities other than advertising, personal selling, and publicity that stimulate customer purchases.

• Billions of $$$$s a year are spent on sales promotion activities, including visual merchandising (displays), coupons, in store demonstrations, cash discounts and price incentives, product samples, contests, introductory offers, and free accessories.

Sales Promotion

• Sales promotions can target either intermediaries or ultimate consumers. Regardless of the target market, sales promotions have their advantages. They are measurable, have a low cost per exposure, attract new customers, generate excitement, encourage quick responses, provide added value, and boost repeat purchases.

• Sales promotions help to sell old stock, and adding a free sample of a new product to an existing product in decline may help to extend the declining product’s life cycle.

Sales promotions offered to intermediaries (middlemen) include merchandising

allowances, sales contests, trade shows, exhibitions, and dealer incentives.

During McDonald’s Monopoly sales promotion, sales often jump at least 5%.

Sales Promotions

• On the other hand, sales promotions are very short-term in nature, and NOT GOOD for delivering complicated messages. Also, they can cheapen a company’s image.

• Businesses must be careful when using sales promotions because they don’t want customers to develop a “no bonus, no buy” attitude.

Promotional Mix

• The promotional mix – made up of advertising, personal selling, publicity and sales promotion plays a key role in obtaining customers. An appropriate blend of the promotional elements enables businesses to effectively communicate with consumers.

• It increases brand recognition, raises product awareness, and communicates product benefits. By delivering messages in multiple ways, using multiple promotional mix elements, a business is more likely to reach its target market than it would using one form of promotion alone. The right promotional mix drives sales and ultimately helps the company reach its marketing objectives and goals.

Promotional Mix

• By playing follow the leader - competing businesses within the same industry usually use quite similar promotional mixes because many of the factors affecting the promotional mix are the same for those businesses.

• Businesses also use the same promotional activities to prevent losing customers to competitors. Reducing the promotional budget or trying not to outdo the competition would make the business less competitive.

Social Status• You can increase your social status by

purchasing this product. Materialism is an emphasis on, or preoccupation with, attaining things or certain positions—the right clothes, car, job, or social status.

• Some critics believe that advertisements reinforce a materialistic attitude in today's society—defining a person's value in society by his/her possessions.

Comparison Ad

• For example, an ad for a designer product might imply you will achieve a certain social status/acceptance if you buy the product.

• An ad claiming a product has a higher government rating than a competitor's product is an example of a comparison ad

Ads – Social Responsibility

• An advertisement stating that a handmade product is constructed of organic materials is an example of an ad that reinforces the concept of social responsibility.

• A business usually would NOT place an advertisement for the sole purpose of directing consumers to its web site.

Individualized Messages

• The new information technology that includes computerized databases allows businesses to create individualized promotional messages. Businesses can collect a variety of information about customers, enter that information into a database, and use the computer to sort the data.

New Technology & Promotion

• For example, a business might track customers according to their preferences for products and then generate mailing lists and individualized messages that promote specific products to specific customers.

• Businesses created commercials, premiums, and publicity campaigns before the new technology was developed; however, new technology makes some of these activities easier to perform.

Customized Messages• Information can be communicated by more venues,

and messages can be customized. Because there are more people who are using personal computers, new computer software programs are being developed to help businesses of all sizes to personalize promotional messages.

• Personalized messages can be developed for specific target market members and can be communicated through traditional direct mail or Internet (e.g., electronic mail, web sites) channels.

Technology and Promotion• Although technological advancements often help

companies become more productive and cost-efficient, it does NOT necessarily mean the businesses have additional funds to spend on promotional activities.

• Although computer advancements have helped accelerate the time to develop promotional campaigns, it does NOT necessarily affect creativity. The number of channels needed to carry out promotional plans is highly dependent on the type of promotional activity.

Advertising Principles & Practice• Children are impressionable, and the wrong kinds

of advertising can affect their development. This was one of the most controversial issues of the 1970s.

• Children were watching hours of TV each day, and some people believed advertisers were taking advantage of the fact children are impressionable and often unable to evaluate advertising messages and make responsible purchase decisions.

Advertising Principles & Practice

• So, legislation was passed and the Better Business Bureau, among others, published guidelines geared specifically to advertisers who target children in their communication.

• Parents were among those who raised issues about advertising to children but NOT primarily because their children were asking for the products they saw on television.

Advertising Principles & Practice

• Research has shown that children exposed to a lot of advertising do behave differently, but there is no known research linking juvenile offenders with watching television advertising.

Laws Governing Promotion

• A business must understand the laws governing promotional activities vary by country. Some countries have strict promotional laws that marketers must follow, while other countries' laws are lenient.

• A business that breaks a promotional law may have to pay government fines, which is costly to the business.

Laws Governing Promotion

• Therefore, it is important for marketers to understand which promotional activities are, and are not, permissible in the countries where they sell and promote products.

• In some countries, industry and consumer groups influence how the governments regulate promotion. Some, rather than most, countries have a system of checks and balances to verify that promotion regulations are fair.

External Factors Affecting Promotion

• Government regulations, such as the one prohibiting radio and television cigarette advertising, are part of the external factors that affect promotion.

External Factors Affecting Promotion

• A business must understand the laws governing promotional activities vary by country. Some countries have strict promotional laws marketers must follow, while other countries' laws are lenient.

• A business that breaks a promotional law may have to pay government fines, which is costly to the business. Therefore, it is important for marketers to understand which promotional activities are, and are not, permissible in the countries where they sell and promote products.

External/Internal Factors Affecting Promotion

• In some countries, industry and consumer groups influence how the governments regulate promotion. Some, rather than most, countries have a system of checks and balances to verify that promotion regulations are fair.

• Changes in the product's price or distribution methods, or a reorganization of the business are examples of internal factors that affect promotion.

Promotion – Decision-Making

• Promotion helps the customer determine which product is the right one for him/her, or the most appropriate. Promotion introduces new products to consumers and assists with decision making. It does NOT help consumers to spend more on products or delay decisions. It is the salesperson's job to identify the customer's buying motives, or reasons for buying

Institutional Promotion

• Institutional promotions aim to create a certain image in the eyes of consumers relating to the organization’s role in community affairs. Ex. of institutional promotion – Charlotte Observer annually sponsors a marathon which benefits charities.

• Supporting personal selling activities, introducing new goods or services, and creating consumer interest in goods or services are all objectives of promotional advertising.

Promotion – Persuade to Buy

• Product promotion attempts to persuade consumers to buy a good/service. A half-price sale is attempting to do just that. Since the business is paying for its own announcement, this is NOT publicity.

• Institutional promotion aims to create a certain image in the eyes of consumers. Sales promotion understands the concepts and strategies needed to communicate information about goods, services, images, and/or ideas to achieve a desired outcome.

Focus of Promotion

• In the growth stage, competing products appear on the market, and promotional activities focus on pointing out differences between competing products.

• When a product is first placed on the market, it is in the introductory stage, and it is promoted to gain customer awareness. Little product promotion occurs during the declining stage; rather, money is invested in promotional activities to maintain a positive company image.

REVIEW

• 81. (2) What is an example of an external factor that affects promotion?

• A. Reorganization of the business • B. Government regulation of ads • C. Increase in a product's price • D. A change in distribution methods

• 82. (2) How does promotion benefit customers?

• A. Causes them to postpone making buying decisions

• B. Enables them to identify their buying motives

• C. Helps them to select appropriate products

• D. Requires them to spend more on product

• 83. (2) What type of promotion is depicted by a business's one-time announcement of its half-price sale in the local newspaper?

• A. Product promotion • B. Institutional advertising• C. Free publicity• D. Sales promotion

• 84. (2) What is an objective of institutional advertising?

• A. To support personal selling activities • B. To demonstrate the organization's role in

community affairs • C. To introduce new goods or services • D. To create consumer interest in the

company's goods or services

• 85. (2) In which stage of a product's life cycle do promotional activities focus on differences between competing products?

• A. Introductory • B. Growth • C. Declining• D. Introduction

• 86. (2) What form of promotion is generally emphasized for complex, technical products sold to industrial users?

• A. Personal selling • B. Sales promotion • C. Publicity• D. Advertising

• 87. (2) How do competing businesses within the same industry usually react to each other's promotional mixes?

• A. By playing follow the leader• B. By reducing their promotional budgets• C. By trying not to outdo each other • D. By changing distribution channels

• 88. (2) What is an example of publicity?

• A. Company news release • B. Direct mail • C. Billboard• D. Company television commercial

• 89. (2) What is an example of advertisement stereotyping?

• A. A television commercial depicts a woman mopping the kitchen with a new floor cleaner.

• B. A print ad shows a middle-aged male pouring orange juice in glasses for his children.

• C. A magazine ad campaign presents a variety of people who encourage others to drink milk.

• D. A well-known athlete records a PSA that emphasizes the importance of continuing education.

• 90. (2) Which advertising message reinforces the concept of materialism?

• A. We make this product by hand and use organic materials.

• B. The government rates our product higher than our competitor's product.

• C. You can increase your social status by purchasing this product.

• D. For more information about our line of products, visit our web site.

• 91. (2) What is new technology enabling businesses to create that is impacting the promotion function?

• A. Personalized premiums • B. Publicity campaigns • C. Attractive commercials • D. Individualized messages

• 92. (2) How have technological advancements enhanced a small business's ability to promote its products?

• A. Most companies need fewer channels to coordinate and carry out promotional activities.

• B. Small companies now have more money to spend on promotional activities.

• C. Less time and creativity are required to develop effective promotional campaigns.

• D. Information can be communicated by more venues, and messages can be customized.

• 93. (2) Why are there specific guidelines for advertising to children?

• A. Research indicated that juvenile offenders watched more advertising on television than the average child.

• B. Children are impressionable, and the wrong kinds of advertising can affect their development.

• C. Parents mounted a campaign against advertisers because their children demanded products they saw advertised.

• D. Children revealed, in focus groups, that while they like watching ads, it doesn't make them behave differently.

• 94. (2) Which statement is true about regulating international promotional activities?

• A. Most countries have a system of checks and balances to verify that promotion regulations are fair.

• B. Businesses must submit all promotional materials to the International Ad Coalition for approval.

• C. Governments bear the sole responsibility of monitoring promotional materials and regulations.

• D. A business must understand that the laws governing promotional activities vary by country.

• 95. (2) Why are promotional media such as newspapers and television referred to as mass media?

• A. They can present large amounts of promotion. • B. They direct promotions to a specific audience. • C. They reach a lot of people at the same time. • D. They try to meet the needs of many businesses.

• 96. (2) What is an example of out-of-home media?

• A. A poster on the wall of a subway station

• B. An eye-appealing card placed in a mailbox

• C. A calendar imprinted with a company's name

• D. An electrical sign located in a high-traffic area

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