4 Chapter Four Promotions Opportunity Analysis Copyright 2010

4 Chapter Four Promotions Opportunity Analysis Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -1

4 Pets. Mart Pets are now part of the family. • Attitudes have changed. • New animal care products. • New animal care services. • Prices are secondary. Why the Change? Discussion Slide Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -2

4 Promotions Opportunity Analysis Chapter Overview 1. Promotions opportunity analysis process 2. Promotional efforts 3. Consumer market segments 4. B-to-B segmentation programs Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -3

FIGURE 4. 1 Steps in a Promotion Opportunity Analysis 1) 2) 3) 4) 5) Conduct communications marketing analysis. Establish communication objectives. Create communications budget. Prepare promotional strategies. Match tactics with strategies. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -4

Promotions Opportunity Analysis Step 1 Conduct a Communication Market Analysis • • • Competitors Opportunities Target markets Customers Product positioning Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -5

Competitors • Identify major competitors. • Identify communication strategies and tactics of each competitor. Sources of information • Secondary data • Other people • Primary research Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -6

Opportunities • Are there customers that the competition is ignoring? • Which markets are heavily saturated? • Are the benefits of our products being clearly articulated? • Are there opportunities to build relationships using a slightly different marketing approach? • Are there opportunities that are not being pursued? Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -7

Target Markets • What benefits does each target market want from the product? • How can each target market be reached? • What appeal works best for each target market? • What needs of the target market are not being met by a competing firm? • What is the demographic and psychographic makeup of each target market? Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -8

Customers Three Types of Customers • Current company customers • The competitors’ customers • Potential customers who currently do not purchase the product but may become interested Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -9

Product Positioning • Is the perception created in the consumer’s mind regarding the nature of the company and its products relative to the competition? • Positioning is created by factors such as product quality, prices, distribution, image, and marketing communications. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -10

FIGURE 4. 3 Product Positioning Strategies § Attributes § Competitors § Use or application § Price/quality § Product user § Product class § Cultural symbol Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -11

Promotions Opportunity Analysis Step 2 Establish Communication Objectives • • • Develop brand awareness Increase good/service category demand Change customer beliefs or attitudes Enhance purchase actions Encourage repeat purchases Build customer traffic Enhance firm image Increase market share Increase sales Reinforce purchase decisions Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -12

Promotions Opportunity Analysis Step 3 Establish a Communications Budget • Budgets based on • communication objectives • marketing objectives • Budgets vary from consumer to B-to-B markets • Unrealistic assumption to assume direct relationship between advertising and sales. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -13

Factors Impacting Relationship Between Promotions and Sales • • • The goal of the promotion Threshold effects Carryover effects Wear-out effects Decay effects Random events Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -14

FIGURE 4. 5 A Sale-Response Function Curve Combined with the Downward Response Curve and Marginal Analysis Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -15

Carryover effects are important in advertising products such as boats. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -16

FIGURE 4. 6 A Decay Effects Model Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -17

FIGURE 4. 7 Methods of Determining Marketing Communication Budgets • • • Percentage of sales Meet-the-competition “What we can afford” Objective and task Payout planning Quantitative models Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -18

FIGURE 4. 8 Breakdown of Marketing Expenditures Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -19

FIGURE 4. 9 Advertising Expenditures in Top 10 Countries Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -20

FIGURE 4. 10 Advertising Expenditures by Media Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -21

Restaurant Chains U. S. Market Share vs Media Ad Spending Rank Brand Market Share Media Ad Spend (Mil) Cost Per Share Pt. (Mil) (Thousands) 1 Mc. Donald’s 7. 7% $ 727. 7 $ 93. 9 2 Burger King 2. 4% $ 268. 8 $ 113. 2 3 Wendy’s 2. 3% $ 374. 7 $161. 5 4 Subway 2. 2% $ 325. 2 $150. 1 5 Taco Bell 1. 9% $ 231. 7 $125. 1 Source: “Top 10 Restaurant Chains, ” www. adage. com, accessed October 1, 2008 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -22

Automotive Brands U. S. Market Share vs Media Ad Spending Rank Brand Market Share Media Ad Spend (Mil) Cost Per Share Pt. (Mil) (Thousands) 1 Toyota Camry 5. 4% $ 65. 6 $ 12. 1 2 Honda Accord 4. 6% $ 114. 3 $ 24. 8 3 Honda Civic 3. 9% $ 112. 0 $ 28. 7 4 Nissan Altima 3. 2% $ 132. 1 $ 41. 2 5 Chevrolet Impala 3. 1% $ 18. 8 $ 58. 5 Source: “Top 10 Auto Brands, ” www. adage. com, accessed October 1, 2008 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -23

Shampoos/Conditioners U. S. Market Share vs Media Ad Spending Rank Brand 1 Pantene 2 3 4 5 Market Share Media Ad Spend (Mil) Cost Per Share Pt. (Mil) (Thousands) 19. 3% $ 175. 8 $ 9. 1 Suave 7. 3% $ 16. 1 $ 2. 2 Clairol Herbal Essence L’Oreal 5. 7% $ 22. 6 $ 3. 9 5. 1% $ 38. 9 $ 7. 6 Head & Shoulders 4. 9% $ 52. 5 $ 10. 7 Source: “Top 10 Shampoos/Conditioners, ” www. adage. com, accessed October 1, 2008 Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -24

Promotions Opportunity Analysis Step 4 Prepare Communication Strategies • Communication strategies are broad, long-term guidelines for the marketing communications program. • Should be linked to opportunities and threats identified by the communication market analysis. • Should fit with the company’s overall message, image, and themes. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -25

Promotions Opportunity Analysis Step 5 Match Tactics with Strategies Tactics support the communication strategies. Examples of tactics would include: • Specific advertisements • Personal selling enticements for sales reps • Sales promotions • Special product packages and labels • Price changes • Trade discounts to retailers Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -26

FIGURE 4. 12 Advantages of Marketing Segmentation v Identify company strengths and weaknesses v Locate opportunities v Match firm’s expertise with most lucrative markets v Focus budget on specific segment Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -27

Tests to Determine if a Particular Market Segment Is Viable Ø The individuals or businesses within the segment are homogeneous. Ø The market segment is different from the population as a whole and distinct from other market segments. Ø The market segment is large enough to be financially viable to target with a separate marketing campaign. Ø The market segment must be reachable through some type of media or marketing communications method. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -28

FIGURE 4. 13 Methods of Segmenting Consumer Markets • Demographics • Psychographics • Generations • Geographic • Geodemographics • Benefits • Usage Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -29

A Nail Cares advertisement targeted to females. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -30

Radio Ad Directed to Children An advertisement by Junior Fitness Academy targeted to children. Click on speaker to play ad. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -31

VALS 2 Psychographic Segmentation • • Innovators – successful, sophisticated – upscale products. Thinkers – educated, conservative, practical – durability, value. Achievers – goal-oriented, conservative, career, and family Experiencers – young, enthusiastic, impulsive, fashion, social Believers – conservative, conventional, traditional Strivers – trendy, fun-loving, peers important Makers – self-sufficient, respect authority, not materialistic Survivors – safety, security, focus on needs, price Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -32

Psychographics and Technology Psychographic Segmentation • New Enthusiasts – cutting edge, eager, high incomes/education • • Hopefuls – cutting edge, lack financial means Faithful – not eager, but not averse Oldliners – not interested in new technologies Independents – higher incomes, but do not value new technology • Surfers – ambivalent about new technology, cynical about business Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -33

Table 4. 1 Characteristics of Generation Segments Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -34

Ad targeted to seniors. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -35

Geodemographic Segmentation • Combines • Demographic census data • Geographic information • Psychographic information • PRIZM • 62 market segments • Southside City • Towns and Gowns Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -36

FIGURE 4. 14 Methods of Segmenting B-to-B Markets • Industry (NAICS/SIC codes) • Size of business • Geographic location • Product usage • Customer value Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -37

A business-to-business advertisement based on the product usage segmentation strategy. Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -38

FIGURE 4. 15 Successful Globally Integrated Marketing Communications Tactics • • Understand the international market A borderless marketing plan Thinking globally but acting locally Local partnerships Communication segmentation strategies Market communication analysis Solid communication objectives Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 4 -39