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Lecture 15

Managing Sales Promotion and Public

Relations

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Sales promotions• Sales promotions traditionally are complementary

to advertising. • They are used to reinforce and encourage

customers to trial the product and then to purchase.

• Sales promotion provides a range of short-term tactical measures to induce sales of particular products or services.

• Its aim is to provide extra value to the product or service, creating the extra impetus to purchase products that we might not normally buy.

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Sales promotions: a definition

A range of tactical marketing techniques designed within a strategic marketing framework to add value to a product or service in order to achieve specific sales and marketing objectives.

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Sales promotion and other elements of marketing mix

• Sales promotion should be part of a planned approach and very much an integral part of the marketing communications planning framework.

• It should be planned and executed in parallel with associated advertising and possible public relations campaigns.

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Aims and objectives of Sales Promotion

• To increase brand and product awareness - attracting new customers

• To increase trial and adoption of new and existing products

• To attract customers to switch brands and products from competing organizations

• To level out fluctuations in supply and demand• To increase brand usage• To increase customer loyalty• To disseminate information• To encourage trading up to the next size or the next

range

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Hierarchy of objectives• Marketing objective To increase market

penetration by 20 per cent

• Advertising objective To reinforce product and brand to existing customers

• Sales promotion objective To encourage repeat purchase of products and brand loyalty

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Types of sales promotionTypes of sales promotion

Sales promotion

Consumer promotion

Tradepromotion

Sales force promotion

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Sales promotion objectives

• Product trial and sampling

• Increasing rate/frequency of purchase

• Trading up

• Introducing a new product

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Retailer to consumer sales promotions

• The key aims and objectives of this process will be to increase sales through a range of promotional techniques:

• Increase in-store trade and customer traffic - the use of coupons and money-off vouchers.

• Increase frequency of purchase - discounted promotions for next purchase.

• Increase in-store loyalty- through the use of scorecards and rewards systems.

• Increase own brand sales - encourage customers to purchase own brand products through a range of sale promotion incentives such as trial packs, in-store demonstra tions and so on.

• Achieve consistent demand - reduce fluctuations and provide sales promotions in particular time bands to encourage a more consistent approach to shopping

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Sales promotion techniques• Money-off vouchers/coupons• Buy one get one free• Free gifts• Customer loyalty bonus schemes• Twin packs• Bulk buying• Discounts• Try before you buy• Cash rebates• Trial-sized products• Prize draws• Competition codes• Point-of-sale displays.• In-store sampling

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Money-off vouchers• Money-off promotions, in their variety of

implementations, remain the most commonly employed promotional device.

• Often referred to as price packs or RPOs, these promotions offer the consumer the most powerful incentive to purchase - money!

• Most often, the offering consists of a flash on the pack detailing the size of the price reduction, either as an absolute price or as a reduction on the normal price.

• By providing an immediate price reduction, a manufacturer makes the most impactful offer.

• The impact of the technique is considerable. It has a universal appeal and both the trade and the consumer like the promotion.

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Coupons• Coupons is another way of transmitting a money-off offer to

the consumer. • On some occasions, a manufacturer will use another product

within the range to carry the coupon. This is sometimes referred to as cross-couponing.

• Although far more costly, money-off coupons can be distributed within the media, or even on a door-to-door basis to attract new users or to employ a more cost-effective carrier to reach the target audience.

• Where the coupon is designed to be redeemed at the time of a subsequent purchase, such offerings have a similar appearance of immediacy and impact although, in practice, many consumers forget to redeem the coupon.

• Hence, money-off coupons may have a similar visual impact to that of an immediate money-off offer, but will represent a lower real cost, since the level of redemption will be lower.

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Buy one get one freeBuy one get one freeThere are several variations on this theme:• Three for the price of two, which as the title suggests is a

greater value incentive to the purchaser. The retailer may use this option as a means of reducing a stock inventory.

• Lower price item reduced: when two items are bought from a particular range the lower-priced item is discounted. The objective here is to create an incentive for the buyer to try another product within the product range.

• Free product with every purchase: this can be used as a co-branding exercise where the company links up with a related product: for example, a toothpaste manufacturer co-brands with one that produces toothbrushes. Although the toothbrush is free it provides the manufacturer with a promotional outlet which may lead to increasing purchases

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Free gifts• Many manufacturers seek to incentives the purchase by the

offering of a free gift item at the time of purchase. • There are four distinct forms of free gift offer.

– The on-pack free gift is any item of. merchandise which is presented to the consumer by affixing it to the external surface of the product.

– The in-pack free gift is used by a number of packaged goods manufacturers, with a description of the gift on the pack surface, and the item only available once the packaging has been opened.

– The with-pack free gift, is an execution which relies on the co-operation of the retailer, since the free item of merchandise is not attached to the purchased item.

– The fourth important area of free gift is the pack itself. Once it is recognized that the packaging, or some alternative presentation, may represent added value to the consumer, it can be appreciated that this is an area of considerable potential.

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In-store sampling

• In-store sampling may provide the opportunity to provide a direct Interface between the product and the consumer.

• The trade like such promotions, since they generate in-store activity which tends to encourage a higher level of all product purchases - not just the product which is being sampled.

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Customer loyalty schemes: 11-Ps of loyalty marketingCustomer loyalty schemes: 11-Ps of loyalty marketing1. Pricing Be customer-specific2. Purchases Make product-specific offers3. Point flexibility Occasionally offer double points4. Partners Develop alliances with retailers5. Prizes Weekly draw for cardholders6. Pro-bono Allow customers to convert points to

charity donations7. Personalization Direct mail, specifically targeted at the

customer8. Privileges Invite cardholders to special events9. Participation Invite best customers to take part in new

schemes10.Pronto Generate offers at point of sale11.Proactive Use information to predict/preempt

customer behaviour

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Planning process of sales promotional campaign

• Identification of the target market.

• Sales promotion objectives versus budget appropriation.

• Identification of both cost of communication for the sales promotion campaign and also the actual cost of the campaign.

• Implementation - clearly the promotion will probably run in parallel with the advertising programme.

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Trade objectives

• Traffic building

• Inventory building

• Stock reduction

• Offsetting impact of competitive activity

• Promotional support to trade

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Trade promotions• Manufacturers are looking to encourage their

wholesalers and retailers to take their products and effectively 'take them to market'.

• It is likely that manufacturers will encourage organizations to increase their stock levels in order to gain some level of commitment to increase sales potential in the marketplace.

• Alternatively, there is intensive competition for increased shelf space within retail outlets. The greater the incentive provided by the manufacturer, the more potential there is for greater shelf-space in the retail outlet.

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Methods of trade promotion• Allowances and discounts.• Volume allowances.• Discount overriders - based upon retrospective

performance, for example on a quarterly or annual basis.

• Free merchandize. • Selling and marketing assistance - co-operative

advertising, merchandizing allowances market information, product training,

• Sales contests. • Bonus payments

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Sales force objectives

• Provide the opportunity to build on special events, for example, a new store opening.

• The motivation of the sales force, dealers, etc.

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PR

Public relations is the dimension of communications which is specifically concerned with establishing and enhancing goodwill between an organization and the various publics with which it seeks to communicate.

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PR: definitions

The Institute of Public Relations (IPR) defines public relations as:

‘The deliberate, planned and sustained effort to establish and maintain mutual

understanding between an organisation and its publics’.

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PR: definitionsThe Public Relations Society of America adopts a broader-based definition and, more importantly, identifies a series of specific functions relating to public relations:

1. Anticipating, analyzing and interpreting public opinion, attitudes and issues which might impact, for good or ill, on the operations and plans of the organization.

2. Counseling management at all levels with regard to policy decisions, courses of action and communication.

3. Researching, conducting and evaluating, on a continuing basis, programmes of action and communication to achieve informed public understanding necessary for the success of the organization's aims.

4. Planning and implementing the organization's efforts to influence or change public policy.

5. Managing the resources needed to perform the functions of public relations.

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PR and other elements of promotional mix

• Public relations, as with all other elements of the marketing mix, requires a planned approach and plays an important role at a strategic level. It is also subject to strategic level objectives.

• For example, the launch of a new model by Mercedes Benz will be subject to a significant PR campaign running in parallel with significant advertising and direct marketing, perhaps on a local level by the local dealerships.

• Therefore PR becomes a high-level communications objective and it is critical that it is subject to the same intensity in respect of targeting specific groups of the public

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A comparison between public relations and advertising

The goals of advertising and PR are somewhat different. • The primary goal of advertising is to inform and persuade

consumers in relation to a specific product offering. • The primary goal of PR is to establish goodwill, and to develop

favourable attitudes and an understanding of the organization and its products or services.

• A major distinction between advertising and PR is the credibility of the alternative routes to message delivery. PR messages are included in media vehicles as news stories and are, as a result, somewhat more credible than advertising.

• Advertising is inherently based upon the self-interest of the organization placing it and paying for the exposure.

• PR messages, on the other hand, are not immediately apparent as such. They appear as editorial content within a newspaper, magazine or television segment and are often seen as 'independent' of the company which origi nated them.

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Public relations

• Publicity and public relations are often interrelated and seen as companions within the promotional mix.

• Indeed publicity is often deemed to be part of public relations activities and certainly seems to happen as a result of PR.

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Publicity vs. PR

• Publicity- is information, news, communications in relation to the organization, transmitted through a range of different media.

• Public relations - is a planned and sustained effort to establish and maintain goodwill and mutual understanding between an organization and its target public.

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The role of PR

• The role of public relations is to look after the nature and basis of the external relationships between the organization and all stakeholder groups.

• It is aimed at creating a sustainable corporate brand and an overall company image within the marketplace.

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Aims and objectives of public relationsAims and objectives of public relations

• To create and maintain the corporate and indeed brand image

• To enhance the position and standing of the organization in the eyes of the public

• To communicate the organization's ethos and philosophy, and corporate values

• To disseminate information to the public• To undertake damage limitation activities to

overcome poor publicity for the organization• To raise the company profile and forge stronger,

lasting, customer and supply chain relationships.

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PR objectives• Increase awareness of the company;• Increase awareness of the brands or services provided by

the organization;• Reinforce the business objectives of the organization;• Identify and explain company policy;• Provide a focus of attention on those issues which are

important to the company;• Encourage external debate on those issues;• Help to change opinions to those which are favourable to

the organization;• Assist the process of changing attitudes towards the

organization and its operations;• Create positive attitudes towards the company's products

and services;• Help in the building of the reputation of an organization;• Motivate staff and enhance the recruitment process;• Help restore the credibility of a company, particularly after

some specific crisis;• Reinforce the marketing and sales efforts;• Build upon or change purchasing behaviour

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Public relations and attitude change?

The whole basis of PR is to continually reinforce a positive

attitude towards the organization in the minds of the public, and

therefore for PR to be successful it has to change a range of negative

attitudes into positive attitudes.

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Negative Negative

Hostility

Hostility

Prejudice Prejudice

Apathy Apathy

Ignorance Ignorance

From….. From…..

To…..Sympathy Sympathy

Acceptance Acceptance

Interest Interest

Knowledge Knowledge

Positive

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The functions of public relations• Opinion forming• Liaison with public officials- Maintaining close and realistic

relationships with local and central government officials and other regulatory bodies is a key dimension of positive public relations.

• Communications policies• Community relations -No organization exists in isolation of the

various communities within which it exists. Like other aspects of its operations, these are multi-dimensional.

• In-house activities -Most companies recognize the need to maintain positive relationships with all members of staff.

• Media relations -The appearance of positive publicity for a company is the result of carefully nurtured relationships between the various media and the company over a long period of time.

• Event management - events are used to create positive relationships between the company and one or more of its target audiences, often of an informal nature.

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The functions of public relations

• Product or service publicity -The external perception of public relations is its involvement with the creation of publicity for the products and services which the company provides.

• Business sponsorship -A similarly important area of activity is that of creating business sponsorships which serve to associate the company with some specific activity, designed to enhance the image associations of the organization.

• Financial activity• In-house activities -Most companies recognize the need to

maintain positive relationships with all members of staff. The role of public relations will be to explain and secure support for the variety of management decisions which will be taken. Often, the organ for such communications will be some form of in-house journal, designed to create a bond between the people who work within the organization.

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Publics: a definition

Any group with some common characteristics, with which an organization needs to communicate. Each public poses a different communication problem, as each has different information needs and requires a different kind of relationship with the organization, and may start with perceptions of what the organization stands for.

(Marston, 1979 as quoted in Brassington and Pettitt, 2000)

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Publics • Customer groups.• Local and central government.• The general public.• Financial institutions -

investors/shareholders/borrowers.• The media - TV, press, radio (locally and

nationally).• Opinion leaders/formers.• Internal marketplace - employees, trade unions,

employee relations bodies.• Potential employees.• Suppliers, distributors.• Local community

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Types of publics• Direct publics: as the title suggests these are

publics that have a direct relationship with the organisation or individual. Depending upon the nature of the relationship they normally include employees/ customers, suppliers, competitors and the local community.

• Indirect publics: these are publics that have no immediate direct relationship with the organisation or individual. Examples are the proposed introduction of new rules and regulations by a government department, and how a company or individual handles a crisis management situation.

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PR techniques/tools• Press releases• Press conferences• Publications• Advertising• Media relations• Events• Annual reports• Lobbying• Internal PR.• Sponsorship • Two additional tools of public relations, however,

deserve special mention.

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Advertorials• An advertorial is a combination of advertisementcombination of advertisement and

editorialeditorial, paid for by the advertiser and appearing to look paid for by the advertiser and appearing to look like editorial from the newspaperlike editorial from the newspaper. Such activities must be flagged with the word 'advertisement'.

• Readers enjoy advertorials as a form of communication; appreciate that they usually provide more information than conventional advertising; and that they represent added value advertising.

• Their success depends on:– the relevance of the product to the reader;– the fit with the motivations for magazine purchase;– the product category relevance;– the fit with the editorial style, content and image of the

magazine;– the balance between information and selling;– the visual appeal.

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Infomercials

• These extend the premise of the advertorial into the television medium.

• They first started in the USA on cable and local TV .

• The growth of commercial television, and the advent of the vast numbers of digital channels, are likely to extend the potential application of the technique.

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Adding to brand values• Consumers buy company reputation as much as they

purchase the individual products which those companies produce.

• Most of the conversations companies have with their customers are related to their products and services.

• The study (USA by DDB Needham and Porter Novelli) identified five factors which had a major influence on consumers:

• 96 per cent rated product quality;• 85 per cent the company's method of handling complaints;• 73 per cent the way in which a company handles a crisis in which

it is at fault;• 60 per cent the handling of a challenge by a government agency

about the safety of its products;• 59 per cent an accusation of illegal or unethical trading practices.

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Responding to crisis situations

• A key role of public relations is the management of the relationship between an organization and its publics at times of crisis.

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Charity PR• Charitable organizations and other non-profit

organizations are prime users of public relations activities

• A primary requirement for charitable bodies is the need to raise funds to finance their main activities.

• Since the majority of charities depend both on voluntary contributions and voluntary participation, activity is needed which will maintain interest in the areas of concern.

• In all cases, the use of public relations must relate to the strategic aims of the organization. It is important that any such events are designed to fulfill specific objectives which relate to the overall goals.

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Sponsorship

Sponsorship is the provision of financial or material support by a company for some independent activity... not usually directly linked to the company's normal business, but support from which the sponsoring company would hope to benefit. (Wilmhurst, 1999)

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Sponsorship objectives

• Increasing brand awareness

• Building and enhancing corporate image

• Raising awareness of brands related to products restricted in advertising through various legislation, such as alcohol and cigarettes

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Types of sponsorship

• Programme sponsorship

• Вroadcast sponsorship

• Arts/sports sponsorship

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Types of sponsorship• Sponsorship of other events - for example

exhibitions, festivals and opening ceremo nies. These are again high profile, and are sometimes very useful forms of sponsorship for smaller businesses that wish to raise their profile locally.

• Sponsorship of individuals or teams- Mercedes Benz sponsor the British tennis player Tim Henman and Siemens sponsor Formula One motor racing.

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Role of sponsorship• Sponsorship can provide a more cost-effective means

of reaching the target audience, but the design, content and message are much more controlled.

• From a corporate perspective and PR perspective, sponsorship raises the profile of the organization and its corporate values, and in some instances can really bring the brand name and corporate image to centre stage.

• Sponsorship offers vast opportunities for the organization in terms of the value-added perspective of merchandizing, public relations activities, improved stakeholder relationships and high lighted ethical and social values.

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Sponsorship: considerationsHowever, a number of key factors should be considered prior to taking the decision to proceed with sponsorship arrangements:

• What relevance does the particular sponsorship arrangement have in terms of the match between the two organizations and the potential target audience? For example, it is clear that when Carling Black Label sponsor sports events it will bring in additional sales of both drinks and cigarettes, both during and after the event, as support for sport is effectively linked to both of these habits.

• The period of impact- How long before and after the event will the sponsorship profile last for? Is the event a one-off or a sequence of events?

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Sponsorship: considerations

– The uniqueness of the sponsorship agreement- From a competitive perspective it will be essential that the agreement with the sponsored individual or organization allows the brand, market and competitive position to be differentiated in a unique way.

– The level of spin-off promotions is also essential - For example, the importance of a co-ordinated approach between other elements of the promotional mix will be essential to maximize and optimize cost-effectiveness of particular high profile events. Here advertising, merchandizing and promotional incentives may be a particular match for the promotional mix.

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Programme planning• The development of a cohesive and effective PR

plan is dependent, as we have seen, on a thorough understanding of the audiences for the campaign message. – Situational analysis

– Determination of objectives

– Identification of target publics

– Choice of PR strategy

– Budget definition

– Development of programme components

– Programme implementation

– Evaluation and feedback

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Thank you for attention