Transcript Chapter 3 Effects of IT on Strategy and Competition

Part 5
PROMOTION DECISIONS
Dr. Chen, Principle of Marketing
15: Integrated Marketing
Communications
16: Advertising and Public
Relations
17: Personal Selling and Sales
Promotion
Dr. Chen, Principle of Marketing
Chapter 15
Integrated Marketing
Communications
Professor Jason C. H. Chen, Ph.D.
School of Business Administration
Gonzaga University
Spokane, WA 99258
[email protected]
Dr. Chen, Principle of Marketing
Learning Objectives
 Describe the nature of integrated marketing
communications
 Examine the process of communication
 Understand the role and objectives of promotion
 Explore the elements of the promotion mix
 Examine the selection of promotion mix elements
 Understand word-of-mouth communication and how it
affects promotion
 Understand product placement promotions
 Examine criticisms and defenses of promotion
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Integrated Marketing Communications
 Refer to coordination promotion and other marketing
efforts for maximum informational and persuasive
impact
 Goal - To send a _________
consistent message to customers
 Allow an organization to coordinate and manage its
promotional efforts
 Enable synchronization of promotion elements
 Improve the efficiency and effectiveness of promotion
budgets
 Foster long-term customer relationships
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Communication Process
Communication: Sharing of meaning through the
transmission of information
Source: Person, group, or organization with a meaning
it tries to share with a receiver or an audience
Receiver: Individual, group, or organization that
decodes a coded message
Coding process: Converting meaning into a series of
signs or symbols
_____
Communications channel: Medium of transmission
that carries the coded message from the source to the
receiver
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Figure 15.1 - The Communication Process
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Decoding Process
 Converting signs or symbols into concepts and
ideas
 Noise: Anything that reduces a
communication’s clarity and accuracy
 Has
many sources and may affect any or all parts of
the communication process
 Occurs when a source uses signs or symbols that
are unfamiliar to the receiver
 Can originate in the receiver
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Decoding Process
 Feedback: Receiver’s response to a decoded
message
 Coded
and sent through a communications channel
 Decoded by the receiver
 Immediate during face-to-face communication
 Slow when mass communication is used
 Channel capacity: Limit on the volume of
information a communication channel can
handle effectively
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Sources of News Information for Americans
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Chen,
of Marketing
Copyright
2014Principle
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Promotion
 Promotion is communication that builds and
maintains favorable relationships by informing,
reminding one or more audiences
persuading and _________
positively and ______
accept its
view an organization _________
products
 To
 For maximum benefit, marketers strive for proper:
 Planning
 Implementation
 Coordination
 Control
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of communications
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Figure 15.2 - Information Flows Are Important
in Integrated Marketing Communications
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Table 15.2 - Possible Objectives of Promotion
awareness is crucial to initiating the product
For example, ___________
adoption process for new products or a line extension
(For target market and
market segmentation)
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Create Awareness
 Awareness is crucial to initiating the product
adoption process for new products
 For existing products, promotional efforts
create increased awareness of
 Brands
 Product features
 Image-related issues
 Operational characteristics
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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17-14
AIDA Model
(Also study p. 466 in ch16)




Awareness
Create _________
Interest
Produce _________
Desire
Create _______
Result in purchase Action
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Fig. Extra -1: Relation of Promotion Objectives,
Adoption process, and AIDA Model
Promotion Objectives
Adoption Process
AIDA Model
Informing
Awareness
Interest
Evaluation
Attention
Interest
Persuading
Trail
Desire
Decision
Reminding
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Confirmation
Action
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Fig. Extra-2: Impact of promotional tools on consumer response
Advertising
Effectiveness
Personal Selling
Public relations
and publicity
Awareness/Attention
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Interest
Sales
promotion
Desire
Action
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Stimulate Demand
 Primary demand: Demand for a product
category rather than for a specific brand through
pioneer promotion
 Pioneer promotion: Informs consumers about
a new product

A way to stimulate primary demand
 Selective demand: Demand for a specific brand
 Requires
singling out attributes important to
potential buyers
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Encourage Product Trial
 If customers stall in the evaluation stage,
marketers can use methods to encourage product
trial in order to move them to product adoption
 Trial Techniques:
 Free samples
 Coupons
 Test drives
 Limited free-use offers
 Contests
 Games
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Identify Prospects
 Certain types of promotional efforts aim to
identify customers who are interested in the
firm’s product and are likely potential buyers
 Techniques Include:
 Television advertisement encouraging the
viewer to visit the company’s website to
share information and receive something of
value
 Company should respond with phone
calls, e-mail, or personal contact by
salesperson
 Social media technology?
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Retain Loyal Customers
 The primary goal of marketing is to maintain
long-term customer relationships
 Keeping current customers is less costly than
acquiring new customers
 Retention techniques include:
 Frequent-user programs
 Special offers for existing customers
 CRM? (Data mining tools)
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Customer Retention
Q: How many times more to find a new customer and
keep him/her as a regular customer?
 Listening to the customer
 Loyalty programs to reward most-valued
customers
 e-Communications – e-newsletters, e-cards, or
e-alerts
 Interactive promotions – Sweepstakes and
contests
 Events – Seminars, workshops, etc.
 Client appreciation programs – Invitations to
special events, etc.
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Facilitate Reseller Support
 Reseller support is a two-way street:
 Producers
Resellers
 Strong relationships with resellers are important
to an organization’s ability to maintain a
sustainable competitive advantage
 Various promotional methods help achieve this
goal
 Resellers view promotion as form of support
 Share promotional expense
 Special offers/buying allowances
Dr. ©
Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Combat Competitive
Promotional Efforts
 Promotional activities may aim to offset or
lessen the effect of a competitor’s
______
promotional and marketing activities
 This type of promotional activity does not
necessarily increase sales or market share, but it
prevent a sales or market share loss.
may _______
 A combative promotional objective is used
most often by firms in highly competitive
consumer markets
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Reduce Sales Fluctuations
 A business cannot operate at peak efficiency
when sales fluctuate rapidly with the
following factors
 Holidays
 Seasonal products
 Climate
 Promotional activities are often designed to
stimulate sales during slumps

Snapper may offer sales prices on lawn mowers
into the fall season to extend the selling season
Dr. Chen, Principle of Marketing
Figure 15.3 - The Four Possible Elements (Methods) of a Promotion Mix
Product
Personal
selling
Place
C
Price
Promotion
Public
relations
Advertising
Sales
promotion
Promotion mix: Combination of specific methods used to manage
the integrated marketing communications for a particular product
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Advertising
 A paid nonpersonal communication about
an organization and its products transmitted
to a target audience through mass media
 Advertising is changing as mass media
consumption habits are changing

The Internet and digital media aim at smaller,
more targeted audiences
 Advertising is highly flexible and can reach
large or small audiences depending on need
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Advantages and Disadvantages of Advertising
 Advantages:
 Cost-efficient when it reaches a vast number of people at a low
cost per person
 It lets the source repeat the message several times
 Adds to a product’s value and Includes celebrity endorsers can
enhance a firm’s and product's image
 Visibility gained from advertising can enhance a firm’s image
 Disadvantages:
high
 Absolute dollar outlay is ____
 Rarely provides rapid feedback
 Difficult to measure its effect on sales
 Less persuasive than personal selling
 Limited time available to communicate a message to customers
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Personal Selling and its Advantages and
Disadvantages
 Personal selling is a paid personal communication
that seeks to inform customers and persuade them
to purchase products in an exchange situation
 Advantages
 Is
a more specific form of advertising
 Has greater impact on consumers
 Provides immediate feedback
 Disadvantages
 Is
________
expensive
small number of individuals
 Is directed to a ________
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Public Relations
Public relations is a broad set of communication efforts
used to create/maintain favorable relationships between
organization and stakeholders
 Publicity is a non-personal communication in a newsstory form about an organization, its products, or both
 Is transmitted through a mass medium at no charge
 Public relations should be viewed as an ongoing program
during crises and good times and should have someone
responsible for public relations either internally or
externally.
 Goal

positive image of the organization
To create and enhance a ________
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Public Relations Tools






Publicity
Annual reports
Brochures
Event sponsorships
Sponsorship of socially responsible programs
Press releases/Conferences/Feature articles
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Sales Promotion
 Activities or materials that act as a direct
inducement, offering added value or incentive
for the product to resellers, salespeople, or
customers
 Free samples
 Games
 Rebates
 Sweepstakes
 Contests
 Premiums
 Coupons
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Top Coupon Categories
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Chen,
of Marketing
Copyright
2014Principle
South-Western,
Cengage Learning. ALL RIGHTS RESERVED.
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Selecting Promotion Mix Elements
1. Resources,
Objectives,
Policies
5. Push and
Pull
Channel
Policies
Promotional
Mix
4. Cost and
Availability of
Promotional
Methods
Dr. Chen, Principle of Marketing
2.
Characteristics
of the Target
Market
3.
Characteristics
of the Product
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Promotional Resources, Objectives,
and Policies
 The size of an organization’s promotional
budget affects the number and intensity of
promotional methods used
 A company’s objectives and policies influence
the types of promotions used
 Different objectives will require different
promotional mixes.
 E.g., creating mass awareness of a new convenience
good (breakfast cereal), its promotion mix may be:
 advertising, sales promotion, and
 public relations
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Characteristics of the Target Market
 Size
 When
limited - Promotion mix may emphasize
personal selling
________
_______
advertising
 When large - Promotion mix may be _________
and sales promotion
 When the population density is uneven - Marketers
may utilize regional advertising and target larger
markets
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Characteristics of the Target Market
 Geographic distribution
 Personal
selling is used when the customers are
concentrated in a small area
 Regional or national advertising is used when the
customers are numerous and dispersed
 Demographic characteristics affect:
 Types
of promotional techniques selected
 Messages and images employed
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Characteristics of the Product
 Business products
 Concentrate
on personal selling
 Use some advertising and sales promotion
 Consumer products
 Advertising
and sales promotion for convenience
goods
 Personal selling for consumer durables
 Public relations for both convenience goods and
consumer durables
 Product price is an important factor
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Characteristics of the Product
 Price influences the promotion mix


Personal selling
High-priced products - ______________
Advertising
Low-priced products – __________
 Distribution intensity affects the promotion mix



Intensive distribution - Advertising and sales promotion
Selective distribution - Promotion mixes vary
Exclusive distribution - Personal selling
 Usage affects the combination of promotional
methods

Highly personal products – Advertising
 Service businesses use tangible products to promote
their intangible services
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Push and Pull Channel Policies
 Push policy:


Promoting a product only to the next institution down the
marketing channel
personal selling , sometimes
Promotion mix: stress on _______________
sales promotion and advertising
 Pull policy:



Promoting a product directly to consumers
Develops strong consumer demand that pulls products
through a marketing channel
advertising and sales
Promotion mix: primarily focus on ____________
promotion
 Not mutually exclusive and can be used simultaneously
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Figure 15.4 - Comparison of Push and Pull Promotional
Strategies
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Word-of-Mouth (WOM) Communications
 Personal, informal exchanges of communication shared by
customers about products, brands, and companies
 Most customers are likely to be influenced by friends and
family members when making purchases
 Crucial for customers in selecting services
 Leads to new-customer acquisition
 Effective WOM relies on marketers identifying opinion
new-to
leaders and is for _______-market
and more expensive
_______
products
 Electronic word of mouth (E-WOM)

Communicating about products through websites, blogs, email, social networks, or online forums
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Growing Importance of Word-of-Mouth
Communications
 Buzz marketing: Attempt to incite publicity
and public excitement surrounding a product
through a creative event
 Should
not violate any laws or have the potential to
be misconstrued and cause undue alarm
 Viral marketing: Strategy to get consumers to
share a marketer’s message
 Done
through e-mail or online video
 Done in a way that spreads dramatically and quickly
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Viral Marketing
 Viral marketing, viral advertising, or marketing buzz
are buzzwords referring to marketing techniques that use
pre-existing social networking services and other
technologies to try to produce increases in brand awareness
or to achieve other marketing objectives (such as product
sales) through self-replicating viral processes, analogous to
the spread of viruses or computer viruses.
 In Volkswagen's The Fun Theory, the brand used a series
of experiments to find out if you could make people
healthier, more environmentally conscious, safer, etc., if
you made a mundane activity more fun. In addition to
piano stairs and the world's deepest trashcan, the brand
invited creative people to come up with their ways of
making boring things fun.
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Product Placement
 A form of advertising that strategically locates
products or product promotions within entertainment
media content to reach the product’s target market
 Important due to increasing fragmentation (target
market) of television viewers
 In-program product placements

Successful in reaching consumers as they are being
entertained (e.g., X Factor)
 Has become more important as more consumers
bypass advertisements (about 60 – 80% users)
through digital video recorders, TiVo, and the
Internet
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Criticisms and Defenses of Promotion
 Even though promotional activities can help customers make
informed purchasing decisions, social scientists, consumer
groups, government agencies, and members of society in
general have long criticized promotion.
 Two main reasons for such criticism:

1) Promotion does have flaws, and

2) it is a highly visible business activity that pervades our daily lives.
 Is promotion deceptive?

Some are, but not all promotion should be condemned

Laws, government regulation, and industry self-regulation have
helped decrease deceptive promotion
 Does promotion increase prices?

If promotion is working to stimulate demand, producing and
reduce prices
marketing larger quantities can actually help _______
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Criticisms and Defenses of Promotion
 Does promotion create needs?

aware
Marketing does not create needs, but makes consumers ______
of needs they already have
 Does promotion encourage materialism?

Marketers assert that values are instilled at home and
promotion does not change people into materialistic consumers
 Does promotion help customers without costing too
much?

Promotions inform customers about a product’s uses, features,
advantages, prices, or purchase locations
 Should potentially harmful products be promoted?

Defenders argue that, as long as it is legal to sell a product,
promoting it should also be allowed
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Table 15.4 - Criticisms and Defenses of Promotion
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Video Case
 VIDEO CASE 15: FRANK PEPE’S
PIZZERIA NAPOLETANA USES POSITIVE
WORD-OF-MOUTH TO BECOME A
PREMIERE PIZZERIA: THE TALE OF
NEW BELGIUM BREWING
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 Summary
 This case discusses how a pizzeria successfully uses
integrated marketing communication. Positive word-ofmouth marketing about the company’s products has
increased its customer base. The pizzeria uses personal
selling to communicate the value of its products when
customers enter the store. It also uses advertising such as
direct mail and digital marketing on sites like Facebook
and Twitter. A major form of sales promotion that the
pizzeria uses is free pizza the week before opening a new
store. Finally, the company makes use of public relations
through fundraisers and donations. Frank Pepe’s Pizzeria
Napoletana has become an expert at using all four parts of
the promotion mix to attract customers.
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1. What are the various promotion elements that Pepe’s uses
to communicate with customers?

 Pepe’s uses personal selling to communicate the value of its
products when customers enter the store. It also uses
advertising such as direct mail and digital marketing on
sites like Facebook and Twitter.
 A major form of sales promotion that the pizzeria uses is
free pizza the week before opening a new store. The
company also makes use of public relations through
fundraisers and donations. These different components
coupled with a premium product and quality experience has
led many customers to tell others about the company
(word-of-mouth marketing).
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2. What role does word of mouth play in Pepe’s
integrated marketing communications?

 Word-of-mouth marketing is one of the strongest
forms of marketing because consumers tend to trust
other consumers.
 Pepe’s uses a combination of strong customer
relationships, premium product offerings, and strong
integrated marketing to create customer satisfaction.
These satisfied customers often tell their friends and
family about their positive experience with Pepe’s,
leading to additional customers.
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3. Evaluate free pizza as a form of sales promotion
in Pepe’s success.

 Pepe’s provides a week of free pizza before
opening a new location. This allows the company
to attract new customers who might not have
known about Pepe’s before and also helps
employees to break in new ovens and become
familiar with Pepe’s culture.
 Not only does this form of sales promotion allow
customers to try Pepe’s quality product, but it also
builds goodwill and a positive image among the
community.
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