Chapter Twelve Communicating Customer Value Advertising Sales Promotion

Chapter Twelve Communicating Customer Value: Advertising, Sales Promotion, and Public Relations Copyright 2007, Prentice Hall, Inc. 1 -

Roadmap: Previewing the Concepts 1. Discuss the process and advantages of integrated marketing communications. 2. Define the five promotion tools and discuss the factors that must be considered in shaping the overall promotion mix. 3. Describe and discuss the major decisions involved in developing an advertising program. 4. Explain how sales promotion campaigns are developed and implemented. 5. Explain how companies use public relations to communicate with their publics. Copyright 2007, Prentice Hall, Inc. 2

Case Study CP + B: An Unusual Success Story The Agency The Tactics § Has recently won both multiple creative awards and several major advertising accounts. § Located in South Beach, FL, far removed from mainstay agencies on Madison Avenue in NY. § Agency philosophy: “Anything and everything is an ad. ” § Heavy focus on guerilla tactics, unconventional uses of media, and holistic marketing strategies while TV is used only sparingly. § Street level research helps develop creative appeals. § Tries to start a consumer movement behind the brand, and campaigns go well beyond advertising. Copyright 2007, Prentice Hall, Inc. 3

The Marketing Communications (Promotion) Mix § § § Advertising Sales Promotion Public Relations Personal Selling Direct Marketing Copyright 2007, Prentice Hall, Inc. 4

New Communications Realities § Mass markets have fragmented, leading to a shift away from mass marketing. § Improvements in information technology are speeding movement toward segmented marketing. § These factors have shifted the marketing communications model. – Less broadcasting – More narrow casting Copyright 2007, Prentice Hall, Inc. 5

Integrated Marketing Communications § Using IMC, the company carefully integrates and coordinates its many communication channels to deliver a clear, consistent, and compelling message about the organization and its brands. – Several factors influence the choice of promotional tools. Copyright 2007, Prentice Hall, Inc. 6

Advertising § Can reach masses of geographically dispersed buyers. § Can repeat a message many times. § Is impersonal, one-way communication. § Can be very costly for some media types. Copyright 2007, Prentice Hall, Inc. 7

Personal Selling § Involves personal interaction between two or more people. § Most effective tool at building preferences, convictions and actions. § Allows relationship building. § Most expensive promotion tool; requires long-term commitment. Copyright 2007, Prentice Hall, Inc. 8

Sales Promotion § § Wide assortment of tools. Attracts consumer attention. Offers strong incentives to buy. Invites and rewards quick consumer response. § Effects are short-lived. Copyright 2007, Prentice Hall, Inc. 9

Public Relations § Very believable. § Reaches people who avoid salespeople and ads. § Can dramatize a company or product. § Tends to be used as an afterthought. § Planned use can be effective and economical. Copyright 2007, Prentice Hall, Inc. 10

Direct Marketing § Many forms that share four primary characteristics: – Nonpublic – Immediate – Customized – Interactive § Well suited to highly targeted marketing. Copyright 2007, Prentice Hall, Inc. 11

Promotion Mix Strategies § Push Strategy – Producer directs its marketing activities toward channel members to induce them to carry the product and promote it to the final consumers. § Pull Strategy – Producer directs its marketing activities toward final consumers to induce them to buy the product. Copyright 2007, Prentice Hall, Inc. 12

Advertising § Advertising has been used for centuries. § U. S. advertisers spend more than $264 billion each year; worldwide spending approaches $550 billion. § Advertising is used by: – – – Business firms Nonprofit organizations Professionals Social agencies Government Copyright 2007, Prentice Hall, Inc. 13

Major Advertising Decisions § § Setting advertising objectives Setting the advertising budget Developing advertising strategy Evaluating advertising campaigns Copyright 2007, Prentice Hall, Inc. 14

Setting Advertising Objectives § Advertising Objective: – specific communication task to be accomplished with a specific target audience during a specific period of time. § Classified by Purpose: – Inform – Persuade – Compare – Remind Copyright 2007, Prentice Hall, Inc. 15

Setting the Advertising Budget § § Affordable method Percentage-of-sales method Competitive-parity method Objective-and-task method Copyright 2007, Prentice Hall, Inc. 16

Developing Advertising Strategy § Consists of two major elements: – Creating advertising messages • Message strategy and message execution must break through the clutter. – Selecting advertising media • Set reach, frequency, and impact goals. • Choose among major media types. • Select specific media vehicles. • Decide on media timing. Copyright 2007, Prentice Hall, Inc. 17

The Message Strategy § Identify customer benefits § Develop compelling creative concept— the “Big Idea” § Advertising appeals should be: meaningful, believable, and distinctive Copyright 2007, Prentice Hall, Inc. 18

Message Execution § § § Slice of Lifestyle Fantasy Mood or Image Musical Personality Symbol Copyright 2007, Prentice Hall, Inc. § Technical Expertise § Scientific Evidence § Testimonial or Endorsement 19

Message Execution § Choose a tone § Use memorable, attention-getting words § Choose correct format elements – Illustration – Headline – Copyright 2007, Prentice Hall, Inc. 20

Setting Media Objectives § Reach – Percentage of people exposed to ad. § Frequency – Number of times a person is exposed to advertisement. § Media Impact – The qualitative value of a message exposure through a given medium. Copyright 2007, Prentice Hall, Inc. 21

Choosing Media Type § Factors to consider when selecting media type: – Medium’s impact – Message effectiveness – Cost Copyright 2007, Prentice Hall, Inc. 22

Choosing Media Vehicles § Media vehicles: – Specific media within each general media type § Factors to consider: – Cost – Audience quality – Audience attention – Editorial quality Copyright 2007, Prentice Hall, Inc. 23

Deciding on Media Timing § Must decide how to schedule the advertising over the course of a year. – Follow seasonal pattern – Oppose seasonal pattern – Same coverage all year § Choose the pattern of the ads – Continuity – Pulsing Copyright 2007, Prentice Hall, Inc. 24

Evaluating Advertising § Measure the communication effects of an ad—“Copy Testing” § Measure the sales effects of an ad – Is the ad increasing sales? Copyright 2007, Prentice Hall, Inc. 25

Other Advertising Considerations § Organization of Ad Function – Small companies – Large companies – Advertising agency § International Advertising Issues Copyright 2007, Prentice Hall, Inc. 26

Sales Promotion § Sales promotion consists of short-term incentives to encourage the purchase or sales of a product or service. § The idea behind sales promotion is to generate immediate sales. Copyright 2007, Prentice Hall, Inc. 27

Rapid Growth of Sales Promotion § Sales promotion can take the form of consumer, business, trade, or sales force promotions. § Rapid growth in the industry has been achieved because: – Product managers are facing more pressure to increase their current sales – Companies face more competition – Advertising efficiency has declined – Consumers have become more deal oriented Copyright 2007, Prentice Hall, Inc. 28

Consumer Promotion § Objectives: – Increase short-term sales – Help build long-term market share § Many tools exist which can help to achieve these objectives. Copyright 2007, Prentice Hall, Inc. 29

Consumer Sales Promotion Tools § § § Samples Coupons Cash refunds Price packs Premiums Advertising Specialties Copyright 2007, Prentice Hall, Inc. § Patronage rewards § Point-of-purchase displays § Demonstrations § Contests § Sweepstakes § Games 30

Trade Promotion § Objectives: – Persuade resellers to carry a brand. – Give a brand shelf space. – Promote brand in advertising. – Push brand to customers. § Tools: – Discounts, allowances, free goods, push money, specialty advertising items. Copyright 2007, Prentice Hall, Inc. 31

Business Promotion § Objectives: – Generate business leads. – Stimulate purchases. – Reward customers. – Motivate salespeople. § Tools: – Conventions, trade shows, sales contests, and many of the same tools used for consumer or trade promotions. Copyright 2007, Prentice Hall, Inc. 32

Developing the Sales Promotion Program § Decide on the size of the incentive § Set conditions for participation § Decide how to promote and distribute the promotion program § Decide the length of the program § Evaluate the program Copyright 2007, Prentice Hall, Inc. 33

Public Relations § Public Relations – building good relations with the firm’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. Copyright 2007, Prentice Hall, Inc. 34

Public Relations Functions § § § Press relations or press agency Product publicity Public affairs Lobbying Investor relations Development Copyright 2007, Prentice Hall, Inc. 35

Public Relations Role & Impact § May strongly impact public awareness at a lower cost than advertising. § Results can be spectacular. § Beginning to play an increasingly important brand-building role. Copyright 2007, Prentice Hall, Inc. 36

Public Relations Tools § § § News Speeches Special events Buzz marketing Mobile marketing Written materials Copyright 2007, Prentice Hall, Inc. § Audiovisual materials § Corporate identity materials § Public service activities § Company Web site 37

Rest Stop: Reviewing the Concepts 1. Discuss the process and advantages of integrated marketing communications. 2. Define the five promotion tools and discuss the factors that must be considered in shaping the overall promotion mix. 3. Describe and discuss the major decisions involved in developing an advertising program. 4. Explain how sales promotion campaigns are developed and implemented. 5. Explain how companies use public relations to communicate with their publics. Copyright 2007, Prentice Hall, Inc. 38