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Assistant Professor, MarketingPlease ensure all electronic devices are in “silent

mode”, “vibrate mode” or “turned off”

Anthony Francescucci

MKT 100-021WEEK 12 – PROMOTION PART 2

& PLACE MANAGEMENT

Welcome to

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PROMOTION MANAGEMENT

Advertising

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CLASSIC COMMUNICATIONS MODEL

2 parties (Sender & Receiver)

2 Tools (Media & Message)

4 Functions (Encoding, Decoding, Response, Feedback)

Noise

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Inform Persuade Remind

ADVERTISING GOALS

To Inform

• Telling the market about a new product• Suggesting new uses for a product• Informing the market of a price change• Explaining how a product works• Describing available services• Correcting false impressions• Reducing consumer’s fears• Building a company image

To Persuade

• Building brand preference• Encouraging switching to your brand• Changing customer’s perception of product

attributes• Persuading consumer to purchase now• Persuading customer to receive a sales call

To Remind

• Reminding the consumer that the product may be needed in the near future

• Reminding consumer where to buy it• Keeping it in consumer’s mind off season• Maintaining top-of-mind awareness

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CONSUMER RESPONSE

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CONSIDER THIS IMAGEAre you aware of this

product?

Do you have any interest in this product?

Do you want to buy this product?

Have you purchase this product?

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CONSIDER THIS IMAGEAre you aware of this

product?

Do you have any interest in this product?

Do you want to buy this product?

Have you purchase this product?

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CONSIDER THIS IMAGEAre you aware of this

product?

Do you have any interest in this product?

Do you want to buy this product?

Have you purchase this product?

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CONSUMER RESPONSE HIERARCHY MODEL

CLASSIC RESPONSE HIERARCHY MODELS

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LearningStage

FeelingStage

BuyingStage

ToInform

ToPersuade

ToRemind

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HOW ADVERTISING WORKS?

3 GeneralHierarchy-of-effects

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3 HIERARCHY OF EFFECTSLFB

Learn

Feel

Buy

FBL

Feel

Buy

Learn

BFL

Buy

Feel

Learn

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LFB: LEARN – FEEL – BUY

This advertising informs the buyer

• To build awareness or to teach consumers about the product so they form new beliefs

• Learning new beliefs will lead to new feelings

• Which will increase purchase intention and actual purchases.

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LFB: LEARN – FEEL – BUYFo

rms • Attempts to increase consumer demand by

amplifying the importance of the problem

• Differentiate on basis of classic differentiation. Uniqueness or superiority of features or performance

• Simplest is a news worthy announcement

ForSale

New product announcement Reminders

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LEARN – FEEL - BUY

Advertising Examples

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LFB: WE ARE, WE HAVE

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LFB: THIS IS HOW I WORK

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Knocked out nose

LFB: HAVE YOU GOT THIS PROBLEM?

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LFB: THIS IS MORE OF A PROBLEM THAN YOU THINK

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LFB: WE WORK BETTER IN THIS SITUATION

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LFB: WE WORK BETTER IN THIS SITUATION

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FBL: FEEL – BUY – LEARNThis advertising connects an image, feeling or mood

to a brand

• Rather than using info to persuade, it uses familiarity and feelings to change behaviour

• It uses humor, popular spokespeople, cultural icons or popular music to evoke positive feelings that will transfer to the product or service.

• Learning occurs after trial• No claims of superiority or solicitation

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FBL: FEEL – BUY – LEARNFo

rms • Image persuasion where simply state the brand

name and illustrate the product attractively

• Evoke memories of past usage experiences that are positive and reinforcing

• Fantasizing where highly desirable feelings and moods are associated with the product or service and conjured up in later use

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FBL: FEEL LOVE, THINK DIAMONDS

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FBL: SMILE, LIKE ME

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FBL: SMILE, LIKE ME

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FBL: THE FEELING OF SPEED

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BFL: BUY – FEEL – LEARN

This advertising encourages consumers to first change their behaviour by trying the product

• The trial results in feelings (e.g. love it or hate it) that lead consumer to learn about the product attributes

• The purchase is often low involvement or impulsive• The ad neither informs nor creates lasting feelings, it

simply prompts trial.

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BFL: TRY ME

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BFL: TRY ME

The bad taste campaign increased Buckley's market share over 10% in the Canadian cough & cold category and has won numerous advertising awards.

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BFL: TRY ME

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WHAT IS THE PERSUASION STRATEGY?

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WHAT IS THE PERSUASION STRATEGY?

• “Have you got this problem, we have the solution” persuasion message.

• Uses huge headlines to get attention. The basic problem is having to fit into clothes rather than clothes fitting you. Land’s End and other direct marketing companies are now offering tailor fitted clothing for 20% more and it is a huge success…an example of one-to-one marketing that addresses the problem in this ad.

Learn-Feel-Buy Ad

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WHAT IS THE PERSUASION STRATEGY?

• directed at feelings of parental responsibility…about as basic as you can get.

• The precious cargo is also very attention-grabbing. Putting babies or puppies in ads increases attention. Notice how different the message and execution is from the previous Goodyear Ad. Which is more likely to grab your attention? Which is simpler? Do you think the ad is directed at women using the second family car that needs its tires replaced? A person- usage situation benefit segmentation example.

A Feel – Buy – Learn Ad

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WHAT IS THE PERSUASION STRATEGY?

• “Have you got this problem we have a solution.” persuasion message

• that aims to extend product usage and demand by lining cooking dishes with foil. For anyone who has ever had to clean such a dish, a very effective ad. The contrast between burnt mess and squeaky clean gets your attention.

A Learn-Feel-Buy Ad

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WHAT IS THE PERSUASION STRATEGY?

• “Try it, you will like it” persuasion ad

• that uses old-fashioned testimonials. But not very attention-grabbing. Might have been better to use radio advertising where you make the sound distinction by increasing volume and clarity of sound when you “hear” the spokesperson put the head-phones on.

A Buy – Feel – Learn Ad

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WHAT IS THE PERSUASION STRATEGY?

• “I am a dream, a good time product.” persuasion message.

• Encourages the viewer to imagine the experience of driving a car, that is only partially shown! A very stylish, black and white ad that fits the product image.

A Feel – Buy – Learn Ad

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WHAT IS THE PERSUASION STRATEGY?

• “We are better than them” persuasion message

• where the them is also us! The comparison is between the new generation and old generation product. The product dominates attention, front and center which is what it should do when marketing new innovation. A perfect example of, if you have something to say, shout it from the rooftops.

A Learn-Feel-Buy Ad

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WHAT IS THE PERSUASION STRATEGY?

• “I am a dream, a good time product.” persuasion message.

• Quite attention-grabbing. The primitive learning reinforcement in use is very strong. Our sense of smell evokes memories very strongly.

A Feel – Buy – Learn Ad

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WHAT IS THE PERSUASION STRATEGY?

• “Try me.” persuasion message.

• This ad encourages trial. Try it, you’ll love it. “Take it. Break it. Share it. Love it.

A Buy – Feel – Learn Ad

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WHAT IS THE PERSUASION STRATEGY?

• “we are…we have” persuasion message• where the “we have” is a “as long as you

own the car tread life guarantee”. But remember – this ad is not targeted to new car owners, but car owners whose tires need to be replaced. That means they have a car that has done 40,000-50,000 miles. Most owners will probably replace the car before it hits 80,000-100,000 so only a few will enjoy the benefit, and what does the small print say? Exclusions apply and after three years you have to pay 30% of replacement cost. The ad is also weak in its attention-grabbing power. Putting the blimp in the ad and making that connection is an example of integrated marketing communication.

A Learn-Feel-Buy Ad

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WHAT IS THE PERSUASION STRATEGY?

• “Like me…like the product.” persuasion message.

• Notice the horse in the glasses “cowboy” association. But do cowboys wear cologne? No. Do modern wanna-be urban cowboys wear cologne? Presumably, the market research says yes

A Feel – Buy – Learn Ad

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WHAT IS THE PERSUASION STRATEGY?

• “This is how I work…” persuasion ad

• This ad introduces the symbol of the gold jacket and attempts to establish it’s meaning with the customer. The ad differentiates Century 21 as different, a cut above the result, “The Gold Standard”.

A Learn-Feel-Buy Ad

Click on logo to start TV ad

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WHAT IS THE PERSUASION STRATEGY?

• “Smile; like me” persuasion message.

• Notice this ad has the couple imagining what their future would be like if they purchased the property, suggesting that a Century 32 agent can help you visualize your future home.

• Uses familiar song and imagery.

A Feel – Buy – Learn Ad

when you give us the confidence to find

your future

we see it together

Click on logo to start TV ad

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MANAGING THE ADVERTISING

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MANAGING THE ADVERTISING AGENCY 1. Client puts together the creative brief.

2. Agency comes up with creatives.

3. Independent research firm tests the ads.

4. Distributors are consulted.

5. Link payment to performance.

Salespeople get paid on performance. Why not ad agencies?

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TYPES OF MEDIA1. Point of Purchase

2. Billboards

3. Newspaper Display Advertising

4. Direct mail advertising

5. Radio and musical jingles

6. Television advertising

7. Internet search advertising

8. Magazines

9. Email and web advertising

10. Sponsorships

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TELEVISION ADVERTISING ADVANTAGES

• Intrusive, attention getting • Most persuasive media • High reach • High frequency • Offers visuals, sound,

movement • Best for demonstrating new

products/solutions and for highlighting zany humor.

DISADVANTAGES

• Networks deliver a mass • Narrow casting limited to cable

television• Specific programs, and local

television• High production and

placement costs• High ad clutter• Only seems to work for new

products and services

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RADIO ADVERTISING ADVANTAGES

• High intimacy• Can reinforce TV ad• Can use announcer disc jockey

endorsements• Highly targeted audiences by

age and music and talk show tastes

• Low production and running costs

• Short ad-placement lead time

DISADVANTAGES

• Lack of visuals limits learning and links to point-of-purchase

• Difficult to buy national coverage

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NEWSPAPER ADVERTISING

ADVANTAGES

• Creates greater urgency• Excellent for local retail sales

and specials• Major private ads media• Classifieds• Short ad-placement lead

time• Co-op advertising with

retailers• High credibility

DISADVANTAGES

• Limited reach• Limited targeting (can use

Suburban papers)• Poor reproduction• Section readership varies

greatly• High cost per thousand

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MAGAZINE ADVERTISING

ADVANTAGES

• Very specific targeting particularly for industrial marketing

• Credible source effects of some respected magazines (Vogue, GQ)

• Allow detailed information for new products & comparison ads

• Extended life of magazine and readership over time

• Can direct market and include coupons in ad

DISADVANTAGES

• Needs high involvement• Long ad-placement lead time• Difficult to get high frequency

within purchase cycle• For some magazines,

placement costs for full colour are high

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OUTDOOR ADVERTISING

ADVANTAGES

• High frequency• Less clutter• Primarily for image and

brand awareness• Low running costs• Quite high production costs• Moving parts create

attention

DISADVANTAGES

• Limited attention span• Limited reach• Limited targeting

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DIRECT MAIL ADVERTISING

ADVANTAGES

• Highly targeted form lists• Personalized message• Enables direct selling• Very important in

industrial marketing (B2B)

DISADVANTAGES

• Clutter of junk mail• Only a single exposure• High per-exposure cost

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INTERNET ADVERTISING

ADVANTAGES

• E-mail very inexpensive• Cross-site advertising

can reach desired target segments/hot prospects

DISADVANTAGES

• Perceived to be irritating and unwanted.

• Is actively suppressed by many buyers

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INTERNET SEARCH ADVERTISING

ADVANTAGES

• Targets hot prospects• Can provide huge

amounts of information• Can measure search

directions, extent and other buyer feedback.

DISADVANTAGES

• Has become more expensive with millions more companies using it.

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PLACE MANAGEMENT

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MARKETING CHANNELS

A set of interdependent organizations involved in the process of making a product or service available for use

or consumption.

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PLAYERS IN MARKETING CHANNEL• Manufacturer Suppliers• Manufacturers

/ Service Providers• Distributors/Wholesalers• Resellers• Retailers• End-users – Consumer• End-users – Business• Telemarketing firms• Websites• Banks• Transportation Companies• Brokers• Manufacturer Representatives

• Buy, take title & resell the productMerchants

• Search for customers& negotiate on behalf of manufacturers

• do not take titleAgents

• Assist, but no title and no negotiating purchase or sale

Facilitators

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THE HP MARKETING CHANNEL: PC

Using the marketing channel players described on the previous slide as a guide

Develop a flowchart that illustrates how a manufacturer such as HP might get their PC products to market using a marketing channel

Work with the people around you.

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HP VALUE CHAIN - SIMPLIFIED

PC Component Supplier(s)

Hewlett Packard

IT Distributors

Value Added

Resellers

Corporate& SMB

End-users

Retailers

ConsumerEnd-users

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HP VALUE NETWORK - COMPLEXPC

Component Supplier

Hewlett Packard

IT Distributors

Value Added

Resellers Corporate & SMB

End-users

Retailers

PC Component

Supplier

PC Component

SupplierLenovo

Toshiba

Altec Lansing

Argyle & Broadstreet

Consumer End-users

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IMPORTANCE OF CHANNELS

Channel margins typically represent the biggest percent of the final price

Chief role of the channel is to convert prospects into customers

Channels chosen affect all marketing P’s

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Manufacturer MarkupManufacturer Cost

Distributor MarkupDistributor Cost

End-User Price

Retailer MarkupRetailer Costs

PRICE BREAKDOWN OF PRINTER HP LaserJet P2015 Mono Laser Printer

$334.99

Distributor

$260.19

$ 52.04

$208.15

Retailer

$267.99

$ 7.81

$260.19

End-User

$334.99

$ 57.00

$267.99

MarkUp %

25%

3%

25%

End-User Price $ 334.99 100%Manufacturer Cost $ 208.15 62%Total Channel Markup $ 126.84 38%

Margin%

17%

2.9%

20%

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THE ROLE OF DISTRIBUTION

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Gather information

Develop and disseminate persuasive communications

Reach agreements on price and terms

Acquire funds to finance inventories

Assume risks

Provide for storage

Provide for buyers’ payment of their bills

Oversee actual transfer of ownership

CHANNEL MEMBER FUNCTIONS

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WHY DELEGATE ROLES TO INTERMEDIARIES?

May lack financial resources to carry out direct marketing

Can earn a greater return on main business through greater efficiency

Direct marketing is not feasible

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INCREASING EFFICIENCY

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DEVELOPING DISTRIBUTION CHANNELS

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NUMBER OF INTERMEDIARIES

Exclusive

Selective

Intensive

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Marketing Mix Fit

Manufacturer’s CapabilitiesQuality-value offering Customer service Push-pull marketing Physical delivery Process improvement

Retailer’s CapabilitiesQuality-value offering Customer service Merchandising Procurement Process improvement

Manufacturer’s Customers Where do they want to shop?

Retailer’s Customers What do they want to buy?

Served Market Fit

EVALUATE THE PARTNERSHIP FIT

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Common CapabilitiesQuality-value offering Customer service Push-pull marketing Physical delivery Process improvement

Common Customers

TO BECOME ONE COMPETITIVE PARTNERSHIP

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PARTNERSHIP FIT

• Better merchandising, higher margins, going upscale enables her to better compete against cheap foreign imports.

Martha Stewart switches her lines of home-wares from K-Mart to Macy’s. Why? What was the advantage for her company?

• Martha Stewart’s TV programs and magazines can cross-promote Macy’s.

What is the big advantage for Macy’s?

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MANAGING MULTIPLE CHANNELS

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MANAGING MULTIPLE CHANNELS

As a company grows in size and adds new products to its lines, it may expand to new segments of shoppers and new retail channels.

The new channel may reach the same segment, but if the manufacturer does not supply the new retailer, then it will distribute and sell a competitor’s product.

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CHANNEL CONFLICT

• Conflict between different levelsVertical

• Conflict between same levelHorizontal

• Conflict between different channels

Multi-channel

Goal Incompatibility

Unclear roles & rights

Differences in perception

Dependence on

Manufacturer

Types Causes

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HP VALUE CHAIN - SIMPLIFIED

PC Component Supplier(s)

Hewlett Packard

IT Distributors

Value Added

Resellers

Corporate & SMB or

ConsumerEnd-users

Retailers

Corporate & SMB or

ConsumerEnd-users

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ANY QUESTIONS

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REMINDERS

• Deadline is 11:59 pm on Sunday April 10th, 2011

Top Gun Quiz 2

• Must be completed by - 11:59 pm on Friday April 15th , 2011

Study Quizzes for Modules 4 - 10

• April 20th, 2010 - 9:00 am, Metro Toronto Convention Center (MTCCS)• Check posted signed, day of, for seat assignment• 2 hours, 60 questions• Some questions from Modules 1-3• Most questions from Modules 4-10• About 1/3 marks from metrics (2 marks each)• Formula Sheet Provided

Final Exam

Don’t forget validated student

card

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REMINDERS

• No CLASS • Option to participate in focus group

(see email sent out)• Extended office hours on

Wednesday April 13th, 1-4pm, by appointment for help with review

NEXT WEEK

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BEFORE YOU LEAVE TODAY

name cards

Front of the Class

Hand In:

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SEE YOU NEXT WEEK