Copyright 2013 Pearson Education Inc Publishing as Prentice
Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Promotion and Pricing Strategies http: //www. wileybusinessupdates. com Chapter 13 Copyright 2017 John Wiley & Sons, Inc.
Learning Objectives 2 1 2 Discuss integrated marketing communications (IMC). Summarize the different types of advertising. 5 6 7 3 Outline sales promotion. 4 Describe pushing and pulling strategies. Discuss the pricing objectives in the marketing mix. Outline pricing strategies. Discuss consumer perceptions of prices. Copyright 2017 John Wiley & Sons, Inc.
Promotion 3 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 Copyright 2017 John Wiley & Sons, Inc.
Promotion 4 Created by advertising agency Goodby Silverstein & Partners to encourage the consumption of cow’s milk, the “Got Milk” is has become one of the most prolific primary demand marketing campaigns of all time. Copyright 2017 John Wiley & Sons, Inc.
Integrated Marketing Communications 5 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, customerfocused 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. Copyright 2017 John Wiley & Sons, Inc.
Promotional Mix 6 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 Copyright 2017 John Wiley & Sons, Inc.
Components of the Promotional Mix 7 Copyright 2017 John Wiley & Sons, Inc.
Objectives of Promotional Strategies 8 Copyright 2017 John Wiley & Sons, Inc.
Promotional Planning 9 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. Copyright 2017 John Wiley & Sons, Inc.
Advertising 10 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. Copyright 2017 John Wiley & Sons, Inc.
Types of Advertising 11 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 Copyright 2017 John Wiley & Sons, Inc.
Types of Advertising 12 Product advertising is used to sell a particular good or service. In this case, the product is Heinz ketchup. Copyright 2017 John Wiley & Sons, Inc.
Advertising and the Product Life Cycle 13 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 Copyright 2017 John Wiley & Sons, Inc.
Advertising Media Pie 14 Copyright 2017 John Wiley & Sons, Inc.
Types of Advertising 15 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 � printed catalogs, ads, and letters Outdoor Advertising � � $7+ billion annually Requires brief messages Digital Advertising � Search engine marketing, display ads, classified ads Copyright 2017 John Wiley & Sons, Inc.
Types of Advertising 16 Digital billboards allow advertisers the flexibility to change a message throughout the day with real time updates and conditional content based upon weather and events. Copyright 2017 John Wiley & Sons, Inc.
Types of Advertising 17 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. Copyright 2017 John Wiley & Sons, Inc.
Sales Promotion 18 Sales promotion consists of forms of promotion such as coupons, product samples, and rebates that support advertising and personal selling. Copyright 2017 John Wiley & Sons, Inc.
Customer-Oriented Promotions 19 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. Copyright 2017 John Wiley & Sons, Inc.
Trade-Oriented Promotions 20 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 Copyright 2017 John Wiley & Sons, Inc.
Personal Selling 21 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. Copyright 2017 John Wiley & Sons, Inc.
Personal Selling 22 All sales activities involve assisting customers. At Weaver’s Coffee & Tea in San Francisco, a helpful barista is conscientious about quality and friendly service to accommodate a customer’s specific needs — and to increase and maintain repeat sales. Copyright 2017 John Wiley & Sons, Inc.
Criteria for Personal Selling 23 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. Copyright 2017 John Wiley & Sons, Inc.
Sales Tasks 24 Order Processing Creative Selling Missionary Selling Telemarketing Copyright 2017 John Wiley & Sons, Inc.
The Sales Process 25 Copyright 2017 John Wiley & Sons, Inc.
Prospecting, Qualifying, and Approaching 26 A good salesperson varies the sales process based on customers’ needs and responses. Prospecting - identifying potential customers Qualifying - identifying potential customers Approaching - analyzing available data about a prospective customer’s product lines and other pertinent information Copyright 2017 John Wiley & Sons, Inc.
Presentation and Demonstration 27 Presentation � 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. Copyright 2017 John Wiley & Sons, Inc.
Handling Objections and Closing 28 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. Copyright 2017 John Wiley & Sons, Inc.
Follow-Up 29 An important part of building a longlasting relationship. May determine whether the customer will make another purchase. Copyright 2017 John Wiley & Sons, Inc.
Public Relations 30 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. Copyright 2017 John Wiley & Sons, Inc.
Pushing and Pulling Strategies 31 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. Copyright 2017 John Wiley & Sons, Inc.
Pricing Objectives 32 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 Copyright 2017 John Wiley & Sons, Inc.
Pricing Objectives in the Marketing Mix 33 Copyright 2017 John Wiley & Sons, Inc.
Pricing Strategies 34 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. Copyright 2017 John Wiley & Sons, Inc.
Pricing Strategies 35 Prestige pricing sets a relatively high price to develop and maintain an image of quality and exclusiveness. People expect to pay more for cars adorned with the Mercedes hood emblem known as “the star. ” Copyright 2017 John Wiley & Sons, Inc.
Cost-Based Pricing 36 Formulas that calculate total costs per unit and then add markups to coverhead 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). Copyright 2017 John Wiley & Sons, Inc.
Break-Even Analysis 37 Breakeven analysis- pricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. Copyright 2017 John Wiley & Sons, Inc.
Break Even Analysis 38 Copyright 2017 John Wiley & Sons, Inc.
Alternative Pricing Objectives 39 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 � � 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 � � 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 Copyright 2017 John Wiley & Sons, Inc.
Alternative Pricing Objectives 40 Some retailers such as Lowe’s use an everyday low pricing strategy that maintains continuous low prices rather than relying on short-term price-cutting tactics such as coupons, rebates, and Copyright 2017 John Wiley & Sons, Inc. special sales.
41 Consumers’ Perceptions of 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 2017 John Wiley & Sons, Inc.
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