promotion strategies(4210)

MARK4210, 2014 Spring, L1/L2

MARK4210: Strategic Marketing

2014 Spring, Section L1/L2

[Class #18]

Promotion Strategies

2 MARK4210, 2014 Spring, L1/L2

Communicating

Promotion

Communicating value

Creating Value

Product Price

Capturing value

Distribution

Delivering value

The Role of Promotion

Inform, persuade & remind the market about the

organization and/or its products


Promotional Mix Elements

Element Description

Personal

selling

Presenting a product to a prospective customer by a

firm’s sales representative, usually face-to-face; often

used for ‘purchasing’ intermediaries

Advertising Paid, non-personal mass communication, in which the

sponsor is clearly identified; often used for end-users

Sales

promotion

Demand-stimulating activity designed to supplement

advertising and complement personal selling

Direct

Marketing

Directly selling goods to consumers rather than via

retailers – usually by direct-mail, telephone selling, or

the internet

Public

Relations

Planned communication effort by an organisation to

contribute to generally favourable attitudes and opinions

toward an organisation and its products Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia


Promotional Mix Elements (2)

Source: Integrated Marketing Communications and Direct Marketing, Kerin, Hartley, Rudelius, McGraw-Hill


9-5

Choosing the Right Promotional

Element – Considerations (1)

1. The target market

Household versus business customers

Number and concentration of customers

Determine customer’s readiness to buy (stage of

purchase behavior): Awareness Knowledge

Liking Preference Conviction Purchase

Sources: Essential Marketing Skills, Peter Rix, McGraw Hill Australia; Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009


9-5



2. The nature of the product

Durable versus non-durable

Unit value of the product (purchase amount)

Amount of product customization

Amount of pre-sale and post-sale service required

Perceived risks



9-5



3. The stage of the product’s life cycle

Market share

Industry concentration

Intensity of competition

Product demand

4. Budget



Choosing the Right Promotional Mix

– Consumer Purchase Decision PRE-PURCHASE

Advertising is most

valuable

Informs potential

customers about the

existence of the product

and the seller

PURCHASE

Importance of personal

selling is highest

Sales promotion can

encourage demand

POST-PURCHASE

Personal contact after

the sale leads to buyer

satisfaction.

Advertising & personal

selling helps reduce

post-purchase anxiety



9-8

Push vs. Pull Strategy: Push

Strategy Characteristics

Producer creates demand for product

Aims promotional activity to channel member(s)

Each channel member promotes to next channel

member

Demand ‘pushed’ down distribution channel

Consumer influenced by retailer’s advertising

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Push vs. Pull Strategy: Pull Strategy

Characteristics

Producer creates demand for product

Aims promotional activity directly at the consumer

Consumer demands product from retailer

Demand ‘pulled’ up the distribution channel


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Push versus Pull Strategy:

Illustration


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Push vs. Pull Strategy:

Considerations on When to Use

Degree of brand loyalty

Degree of brand differentiation

Purchase behavior – planned or impulsive

Whether sales assistance is needed in making the

choice/ purchase

Source: Marketing Management, Kotler & Keller, Pearson, 2012

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Setting the Promotional Budget

Percentage of sales method • Determine past or anticipated sales and apply a

percentage

All available funds (or what can be afforded) • Use all available funds on the promotional campaign

Competitive Parity • Match competition – promotions based on market share

of competitors, or actual expenditure if known

Task or objective method (build-up) • Determine needed promotion tasks or objectives

• Determine cost to perform tasks or meet objective


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Personal Selling: Sales Force

Strategic Considerations

Priority/emphasis between maintaining existing accounts versus converting new customers

Increasing sales force productivity, e.g., leveraging technology and innovative sales techniques

Targeting the ‘right’ people in the customer organization

Sales force size

Sales force motivation (financial, non-financial incentives)

Sales force supervision – includes territory assignment, control, and communication

Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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Advertising: Types

Consumer versus business advertising

Emotional & rational vs informational

Product versus institutional advertising

Focus on particular product or brand, and

information and goodwill to company

Stimulate demand for generic or specific brands

Primary-demand versus selective-demand (brand)

advertising


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Advertising and the Product Life

Cycle

Informative advertising

• Build initial demand during introductory phase of life cycle

Persuasive advertising

• Improve the competitive status of a product, usually

during growth and maturity stages of product life cycle

Comparative advertising

• Compares products directly with their competitors

Reminder-oriented advertising

• Maintain awareness of the importance and usefulness of

a product, especially during late maturity or decline

stages of product life cycle

Source: Contemporary Business, David L. Kurtz, Louis E. Boone, Cengage Learning, 2009

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Advertising: Measuring Effectiveness

Direct tests

• Measure or predict the sales volume stemming from an

advertising campaign

• Tabulate number of inquiries from a direct-response

campaign

Indirect tests

• Measures something other than actual sales (e.g., recall

tests)


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Sales Promotions: Considerations

What are our promotional objectives?

Who is our target market?

Can our product be sampled?

What will it cost to use the right promotional tool?

What is the current economic condition?


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Sales Promotions: Consumer-

oriented

Premiums, Coupons, Rebates, Samples

• Coupons attract customers but focus on price rather than

brand loyalty

• Rebates increase purchase rates, promote multiple

purchases, and reward product users

Games, Contests, and Sweepstakes

• Introduction of new products

• Subject to legal restrictions

Specialty Advertising

• Gift of useful merchandise carrying the name, logo, or

slogan of an organization


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Sales Promotions: Trade-oriented

Sales promotions geared to distribution

intermediaries (NOT consumers)

Objectives:

• To encourage stocking of new products

• To encourage continued stocking of existing products

• To encourage (sometimes “pressure”) intermediaries to

promote products to consumers


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Public Relations: Examples

Supporting charitable projects

Supplying volunteers or other resources

Participating in community-service events

Sponsorship

Providing information to customers via newsletters.

Publicity can be achieved by:

• structured news-release to the media

• coordinating personal communication with a group

• coordinating one-to-one personal communication

(lobbying)


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Announcements & Reminders

PharmaSim Team Live Play Round 1 ends April 14 @8pm

• Round 1 data/results will be erased (!), make sure you download/record beforehand

PharmaSim Team Live Play Round 2

• Starts April 22 @ 7am – Ends May 8 @ 8pm

• NO replay, NO restarts, NO consultation

• In-class team discussions on April 25 (Fri) & April 30 (Wed), LSKG005 -- NO consultations; attendance checked

PharmaSim Final Report – email to [email protected] (copy all members) by May 9 class

Guest Speaker on April 23 (Wed), 7-820pm, LTB

• Mr. Larry CHAN, Digital Marketing Manager, L’Oreal

• Attendance checked (or valid documented excuse)

• Replaces afternoon session (no class)

mailto:[email protected]

promotion strategies(4210)

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