module 9 ppt. !!
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Chapter 14Promotion and Pricing Strategies
Discuss how integrated marketing
communications relates to a firms
overall promotion strategy.
Explain promotional mix andoutline the objectives of promotion.
Summarize the different types of
advertising and advertising media.
Outline the roles of sales
promotion, personal selling, and
public relations.
Describe pushing and pullingpromotional strategies.
Discuss the major ethical issues
involved in promotion.
Outline the different types of
pricing strategies.Discuss how firms set prices in
the marketplace, and
describe the four alter-
native pricing strategies.
Discuss consumer
perceptions of price.
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Promotion The function of informing, persuading, and influencing a purchasedecision.
Integrated marketing communications (IMC) Coordination of all promotional
activitiesmedia advertising, direct mail, personal selling, sales promotion,
and public relationsto produce a unified customer-focused message.
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INTEGRATED MARKETINGCOMMUNICATIONS
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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THE PROMOTIONAL MIXPromotional mix Combination of personal and nonpersonal selling techniques
designed to achieve promotional objectives.
Personal selling Interpersonal promotional process involving a sellers face-to-
face presentation to a prospective buyer.
Nonpersonal sellingAdvertising, sales promotion, direct marketing, and public
relations.
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Objectives of Promotional Strategy
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Providing Information Major portion of U.S. advertising provides information about a product.
Differentiating a Product
Communicate to buyers meaningful distinctions about the attributes, price,
quality, or use of a good or service.
Increasing Sales
Most common objective of a promotional strategy.
Stabilizing Sales
Stable sales evens out the production cycle, reduces some management and
production costs, and simplifies financial, purchasing, and marketing planning.Accentuating the Products Value
Explaining hidden benefits of ownership.
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Promotional Planning 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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ADVERTISINGAdvertising Paid nonpersonal communication delivered through various media
and designed to inform, persuade, or remind members of a particular audience.
Consumers receive 3,500 to 5,000 marketing messages each day.
Television networks earn $22 billion annually from advertising.
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In U.S., automotive, retail, and communications companies spend nearly $4billion annually on advertising.
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Types of AdvertisingProduct 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 Form of institutional messaging that promotes a specific
viewpoint on a public issue as a way to influence public opinion and thelegislative process.
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Advertising and the Product Life CycleInformative advertisingUsed to build initial demand for a product in the
introductory phase of the product life cycle.
Persuasive advertisingAttempts to improve the competitive status of a product,
institution, or concept, usually in the growth and maturity stages of the product
life cycle. Comparative advertisingCompares products directly with their competitors
either by name or by inference.
Reminder-oriented advertisingAppears in the late maturity or decline stages of
the product life cycle to maintain awareness of the importance and usefulness
of a product.
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Advertising MediaAll media offer advantages and disadvantages
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Television Easiest way to reach a large number of consumers.
Variety of channels on cable and satellite networks allows advertisers to target
specialized markets and demographics.
Most expensive advertising medium.
30 second prime time network spots can range from $100,000 to $500,000.Newspapers
Dominate local advertising.
Easy to coordinate with other promotional efforts.
Relatively short life span.
Radio
Average household owns five radios.
Commuters in cars are a captive audience.
Satellite radio offers new opportunities.
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Magazines Consumer publications and trade journals.
May be able to customize message for different areas of the country.
Direct Mail
AverageAmerican receives 550 pieces annually, including 100 catalogs.
High per person cost, but can be carefully targeted and highly effective.
Direct MarketingAssociation helps marketers combat negative attitudes by
offering its members guidelines on ethical business practices.
Outdoor Advertising
$3.2 billion annually, majority for billboards.
Requires brief messages.
Can be opposed by preservation and conservation groups.
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Online and Interactive Advertising
Experts predict sales from online advertising will double by 2010.
Viral advertisingCreates a message that is novel or entertaining enough for
consumers to forward it to others, spreading it like a virus.
Spreading the word costs the advertiser nothing.
Not all online advertising is well received.
Many consumers resent the intrusion ofpop-up ads that suddenly appear ontheir 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.
Examples: infomercials,ATM receipts, directory advertising.
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SALES PROMOTIONSales promotion Nonpersonal marketing
activities other than advertising,
personal selling, and public relations
that stimulate consumer purchasing
and dealer effectiveness.
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Consumer-Oriented PromotionsPremiums, Coupons, Rebates, Samples
Two of every five promotion dollars are spent onpremiums, items given free or
at reduced price with the purchase of another product.
Coupons attract new customers but focus on price rather than brand loyalty.
Rebates increase purchase rates, promote multiple purchases, and reward productusers.
Three of every four consumers who receive asample will try it.
Games, Contest, and Sweepstakes
Often used to introduce new goods and attract new customers.
Subject to legal restrictions.
Specialty Advertising
Gift of useful merchandise carrying the name, logo, or slogan
of an organization.
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Trade-Oriented Promotions
Sales promotion geared to marketing intermediaries rather than to consumers.
Encourage retailers in several ways:
To stock new products.
To continue carrying existing ones.
To promote both new and existing products effectively to consumers.
Point-of-purchase (POP) advertising Displays or demonstrations that promote
products when and where consumers buy them, such as in retail stores.
Promote goods and services at trade shows.
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PERSONAL SELLINGA person-to-person promotional presentation to a potential buyer.
Usually used under four conditions:
Customers are relatively few in number and geographically concentrated.
The product is technically complex, involves trade-ins, and requires special
handling.
The product carries a relatively high price.
It moves through direct-distribution channels.
Example: Selling to the government or military.
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SalesTasks
All involve assisting customers in some way.
Order Processing
Identifying customer needs, pointing out merchandise to
meet them, and processing the order.
Creative Selling
Promoting a good or service whose benefits are not readily
apparent or whose purchase decision requires a close
analysis of alternatives.
Missionary Selling
Representative promotes goodwill for a company orprovides technical or operational assistance to the customer.
Telemarketing
Personal selling conducted by telephone; regulated by the
Federal Trade Commissions 1996 Telemarketing Sales Rule.
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The Sales Process
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The Sales Process
A good salesperson varies the sales process
based on customers needs and responses.
Prospecting, Qualifying, and Approaching
Prospecting Identifying potential customers. Qualifying Identifying potential customers who
have the financial ability and authority to buy.
Approaching Make careful preparations,
analyzing available data about a prospective
customers product lines and other pertinent
information before making the initial contact.
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The Sales ProcessA good salesperson varies the sales process
based on customers needs and responses.
Presentation and Demonstration
Presentation Salespeople communicate
promotional messages. They may describethe 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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The Sales ProcessA good salesperson varies the sales process
based on customers needs and responses.
Handling Objections
Use objections as an opportunity to answer
questions and explain how the product willbenefit the customer.
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The Sales ProcessA good salesperson varies the sales process
based on customers needs and responses.
Closing
The time at which the salesperson actually
asks the prospect to buy.
Even if the sale is not made, the salesperson
should regard the interaction as the beginning
of a potential relationship.
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The Sales ProcessA good salesperson varies the sales process
based on customers needs and responses.
Follow-Up
An important part of building a long-lasting
relationship.
May determine whether the customer will
make another purchase.
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Public RelationsPublic relations Public organizations communications and relationships with its
various audience.
Helps a firm establish awareness of goods and services and builds a positive
image of them.
Publicity
Publicity Stimulation of demand for a good, service, place, idea, person, or
organization by disseminating news or obtaining favorable unpaid media
presentations.
Good publicity can promote a firms positive image
Negative publicity can cause problems.
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PROMOTIONAL STRATEGY
Pushing and Pulling Strategies
Pushing strategy Relies on personal selling to market an item to wholesalers
and retailers in a companys distribution channels.
Companies promote the product to members of the marketing channel, not to
end users.
Pulling strategy Promote a product by generating consumer demand for it,
primarily through advertising and sales promotion appeals.
Potential buyers will request that their suppliersretailers or local
distributorscarry the product, thereby pulling it through the distribution
channel.
Most marketing situations require combinations of pushing and pulling
strategies, although the primary emphasis can vary.
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ETHICS IN PROMOTION
Puffery and Deception
Puffery Exaggeration about the benefits or superiority
of a product.
Legal because it doesnt guarantee anything but raises
ethical questions.
May ultimately undermine the credibility of a firms
marketing messages.
Deception Deliberately making promises that are untrue, such as guaranteed
weight loss in five days, get-rich-quick schemes for would-be entrepreneurs,
or promised return on investments.
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Promotion to Children and Teens Children and teens have enormous purchasing power.
Children cannot analyze advertising messages.
Can be socially responsible (e.g., healthy products).
Promotion in Public Schools and on CollegeCampuses
Schools earn income from in-school advertising, but it is generating backlash.
College students have $122 billion in buying power.
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PRICING OBJECTIVES IN THEMARKETING MIX
Price Exchange value of a good or service.
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Profitability ObjectivesMost common objective.
Some maximize profits by reducing costs
rather than raising costs.
Sometimes maintain price while reducing
package size or amount of product.
Volume Objectives
Bases pricing decisions on market share goals.
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Pricing to Meet CompetitionMeeting competitors price so price becomes
a nonissue in the buying decision.
Competitors cannot legally work together to
set prices.
Competition can result in aprice war.
Prestige Objectives
Establishing a relatively high price to develop and
maintain an image of quality and exclusiveness.
Recognition of the role of price in communicatingan overall image for the firm and its products.
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PRICING STRATEGIESPricing is influenced by people in different areas of a company.
Price Determination in Practice
Cost-based pricingAdding a percentage (markup) to the base cost of a product
to cover overhead costs and generate profits.
Actual markup used varies by such factors as brand image and type of store.
Example: Typical clothing markup by retailers is double the wholesaler price.
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Breakeven AnalysisBreakeven analysis Pricing technique used to determine the minimum sales
volume a product must generate at a certain price level to cover all costs.
Finding the Breakeven Point
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Breakeven AnalysisBreakeven analysis Pricing technique used to determine the minimum sales
volume a product must generate at a certain price level to cover all costs.
Finding the Breakeven Point
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Breakeven AnalysisBreakeven analysis Pricing technique used to determine the minimum sales
volume a product must generate at a certain price level to cover all costs.
Finding the Breakeven Point
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Alternative Pricing StrategiesSkimming Pricing
Setting an intentionally high price relative to the prices of competing products.
Helps marketers set a price that distinguishes a firms high-end product from
those of competitors.
Helps a firm recover its product development costs before competitors enter the
field.
Penetration Pricing
Setting a low price as a major marketing weapon.
Often used with new products.
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Everyday Low Pricing and Discount Pricing
ELP Maintaining continuous low prices rather than relying on short-term price-
cutting tactics such as cents-off coupons, rebates, and special sales.
Discount pricingAttracting customers by dropping prices for a set period of
time.
Helps a firm recover its product development costs before competitors enter thefield.
Competitive Pricing
Reducing the emphasis on price competition by matching other firms prices.
Concentrate marketing efforts on the product, distribution, and promotional
elements of the marketing mix.
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CONSUMER PERCEPTIONS OFPRICE
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 sound less than they really are.
Example: $1.99 or $299.
Also used as a signal a product is on sale.
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