Transcript Susan Berston

Copyright © 2013 Pearson Education, Inc.
Publishing as Prentice Hall
Promotion and Pricing
Strategies
http://www.wileybusinessupdates.com
Chapter 13
Learning Objectives
2
1
Discuss integrated marketing
communications (IMC).
2
Summarize the different types
of advertising.
Outline sales promotion.
5
Discuss the pricing
objectives in the marketing
mix.
6
Outline pricing strategies.
7
Discuss consumer
perceptions of prices.
3
4
Describe pushing and pulling
strategies.
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Promotion
3
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Promotion is the function of informing,
persuading, and influencing a purchase
decision.
Some promotional strategies try to develop
primary demand, or consumer desire for a
general product category.
Most promotions stimulate selective demand,
or a desire for a specific brand
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Integrated Marketing Communications
4
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Integrated marketing communications (IMC) is
the coordination of all promotional activities—
media advertising, direct mail, personal selling,
sales promotion, and public relations—to produce
a unified, customer-focused message.
Must take a broad view and plan for all form of
customer contact.
Create unified personality and message for the
good, service, or brand.
Elements include personal selling, advertising,
sales promotion, publicity, and public relations.
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Promotional Mix
5
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Promotional mix- combination of personal and
nonpersonal selling components designed to
meet the needs of their firm’s target customers
and effectively and efficiently communicate its
message to them.
Personal selling- the most basic form of
promotion: a direct person-to-person
promotional presentation to a potential buyer.
Nonpersonal selling- advertising, sales
promotion, direct marketing, and public relations
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Components of the Promotional Mix
6
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Objectives of Promotional Strategies
7
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Promotional Planning
8

Two promotional planning practices
include:
 Product
placement- marketers pay
placement fees to have their products
showcased in various media, ranging from
newspapers and magazines to television and
movies.
 Guerilla marketing- innovative, low-cost
marketing efforts designed to get consumers’
attention in unusual ways.
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Advertising
9
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Advertising- paid nonpersonal
communication usually targeted at large
numbers of potential buyers.
 Advertising
expenditures are great–
carmakers spend $20 billion per year.
 Consumers are bombarded with many
messages.
 Firms need to be more and more creative and
efficient at getting consumers’ attention.
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Types of Advertising
10
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Product advertising- messages designed to
sell a particular good or service
Institutional advertising- messages that
promote concepts, ideas, philosophies, or
goodwill for industries, companies,
organizations, or government entities
Cause advertising- institutional messaging that
promotes a specific viewpoint on a public issue
as a way to influence public opinion and the
legislative process
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Advertising and the Product
Life Cycle
11
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Informative advertising- used to build initial demand
for a product in the introductory phase
Persuasive advertising- attempts to improve the
competitive status of a product, institution, or concept,
usually in the growth and maturity stages
Comparative advertising- compares products directly
with their competitors either by name or by inference
Reminder-oriented advertising - appears in the late
maturity or decline stages to maintain awareness of the
importance and usefulness of a product
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Advertising Media Pie
12
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Types of Advertising
13
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Television
 Easiest way to reach a large
number of consumers
 Most expensive
Newspapers
 Dominate local advertising
 Short life span
Radio
 Commuters in cars are
captive
 Internet radio offers new
opportunities

Magazines
 Consumer publications and trade
journals w/customized messages

Direct Mail
 12.5 billion catalogs mailed in a
recent year at a cost of $347 per
person, but highly targeted

Outdoor Advertising
 $6.7 billion annually
 Requires brief messages

Internet Advertising
 Search engine marketing, display
ads, classified ads
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Types of Advertising
14
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Online and Interactive Advertising
 Viral advertising creates a message that is novel or
entertaining enough for consumers to forward it to others,
spreading it like a virus.
 Many consumers resent the intrusion of pop-up ads that
suddenly appear on their computer screen.
Sponsorship
 Providing funds for a sporting or cultural event in exchange
for a direct association with the event.
 Benefits: exposure to target audience and association with
image of the event.
Other Media Options
 Marketers look for novel ways to reach customers:
infomercials, ATM receipts, directory advertising.
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Sales Promotion
15

Sales promotion consists of forms of promotion
such as coupons, product samples, and rebates
that support advertising and personal selling.
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Customer-Oriented Promotions
16
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Coupons attract new customers but focus on price rather
than brand loyalty.
Rebates increase purchase rates, promote multiple
purchases, and reward product users.
 Samples - consumers who receive a sample will try it.
Games, Contests, and Sweepstakes for new products
 Cash, merchandise, or travel prizes offered to
participating winners.
Specialty Advertising
 Promotional items that prominently display a firm’s
name, logo, or business slogan.
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Trade-Oriented Promotions
17
Trade Promotion is sales promotion
geared to marketing intermediaries rather
than to consumers
 Encourage retailers

 To
stock new products
 To continue carrying existing ones
 To promote both new and existing products
effectively to consumers
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Personal Selling
18
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A person-to-person promotional presentation to
a potential buyer
 Many
companies consider personal selling the
key to marketing effectiveness.
 A seller matches a firm’s goods and services to
the needs of a particular client or customer.
 Today, sales and sales-related jobs employ about
15 million U.S. workers
 Businesses often spend five to ten times as much
on personal selling as on advertising.
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Criteria for Personal Selling
19
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Customers are few in number and
geographically concentrated
The produce is technically complex
The product carries a relatively high price
The produce moves through direct-distribution
channels.
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Sales Tasks
20
Order Processing
 Creative Selling
 Missionary Selling
 Telemarketing

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The Sales Process
21
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Prospecting, Qualifying, and Approaching
22
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A good salesperson varies
the sales process based on
customers’ needs and
responses.
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Prospecting - identifying
potential customers

Qualifying - identifying
potential customers

Approaching - analyzing
available data about a
prospective customer’s
product lines and other
pertinent information
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Presentation and Demonstration
23
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Presentation
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Salespeople communicate
promotional messages. They
may describe the major
features of their products,
highlight the advantages, and
cite examples of satisfied
consumers.
Demonstration

Reinforces the message that
the salesperson has been
communicating.
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Handling Objections and Closing
24

Use objections as an
opportunity to answer
questions and explain how
the product will benefit the
customer.

The closing is the critical
point in the sales process.

Even if the sale is not made,
the salesperson should
regard the interaction as the
beginning of a potential
relationship.
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Follow-Up
25
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An important part of
building a longlasting relationship.
May determine
whether the
customer will make
another purchase.
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Public Relations
26
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Public relations – a public organization’s communications and
relationships with its various audiences.
 Is an efficient, indirect communications channel for
promoting products. It can publicize products and help
create and maintain a positive image of the company.
Publicity- nonpersonal stimulation of demand for a good,
service, place, idea, event, person, or organization by unpaid
placement of information in print or broadcast media.
Good publicity can promote a firm’s positive image.
Negative publicity can cause problems.
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Pushing and Pulling Strategies
27
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Pushing Strategy relies on personal selling to
market an item to wholesalers and retailers
Pulling Strategy promotes a product by generating
consumer demand for it through advertising and
sales promotion
Most marketing situations require combinations of
push and pull strategies
Cooperative advertising – allowance provided by
marketers in which they share the cost of local
advertising of their firm’s product or product line with
channel partners.
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Pricing Objectives
28
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Price – exchange value of a good or service

Profitability objectives
 Maximize profits by reducing costs
 Maintain price while reducing package size

Volume Objectives
 Base pricing decisions on market share goals

Pricing to meet competition
 Meeting competitors’ price
 Competitors cannot legally work together to set prices.
 Competition can result in a price war.

Prestige Pricing
 Pricing is high to maintain an image of quality and exclusiveness
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Pricing Objectives in the Marketing Mix
29
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Pricing Strategies
30

Prestige Objectives
 Establishing
a relatively high price to develop and
maintain an image of quality and exclusiveness.
 Recognition of the role of price in communicating
an overall image for the firm and its products.
 Products that are limited in distribution or so
popular that they become scarce generate their
own prestige.
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Cost-Based Pricing
31
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Formulas that calculate total costs per unit and
then add markups to cover overhead costs and
generate profits.
Total Costs Plus Markup
Actual markup used varies by such factors as
brand image and type of store.
 Typical
markup for clothing is determined by
doubling the wholesale price (the cost to the
merchant).
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Break-Even Analysis
32
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Breakeven analysis- pricing technique used to
determine the minimum sales volume a product
must generate at a certain price level to cover
all costs.
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Break Even Analysis
33
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Alternative Pricing Objectives
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Skimming Pricing
 Setting an intentionally high price relative to the prices of competing
products
 Helps marketers set a price that distinguishes a firm’s high-end product
from those of competitors
Penetration pricing
 Setting a low price as a major marketing weapon
 Often used with new products
Everyday low pricing and discount pricing
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Maintaining continuous low prices rather than relying on short-term price-cutting
tactics such as cents-off coupons, rebates, and special sales
Discount pricing - businesses hope to attract customers by dropping prices for a
set period of time
Competitive pricing

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Reducing the emphasis on price competition by matching other firms’ prices
Concentrating marketing efforts on the product, distribution, and promotional
elements of the marketing mix
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Consumers’ Perceptions of Price
35

Price-quality relationships
 Consumers’
perceptions of quality closely tied to
price
 High price = prestige and higher quality
 Low price = less prestige and lower quality

Odd pricing
 Setting
prices in uneven amounts or amounts that
sounds less than they really are
 Example: $1.99 or $299
Copyright 2015 John Wiley & Sons, Inc.