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Promotions Promotions opportunity opportunity analysisanalysis

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Chapter overviewChapter overview1. Promotions opportunity

analysis process

2. Promotional efforts

3. Consumer market segments

4. B-to-B segmentation programs

Promotions opportunityPromotions opportunityanalysisanalysis4

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Background Background

• Successful marketing efforts occur because someoneSuccessful marketing efforts occur because someone first identified an opportunity to make a quality contact first identified an opportunity to make a quality contact with a targeted consumer with a targeted consumer

• IMC plans are designed to develop and implement thoseIMC plans are designed to develop and implement those contacts…and to present the targeted consumer with a contacts…and to present the targeted consumer with a well-defined message spoken in a clear, consistent voice well-defined message spoken in a clear, consistent voice

• The purpose of a promotions opportunity analysis is toThe purpose of a promotions opportunity analysis is to identify consumers and competitors in the marketplace – identify consumers and competitors in the marketplace – and to discover new or unique promotional opportunities and to discover new or unique promotional opportunities

Specifies the audiences and markets the firm intends to serveSpecifies the audiences and markets the firm intends to serve Provides guidance and structure to IMC plan Provides guidance and structure to IMC plan

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• Process marketers use to identify target audiences and the Process marketers use to identify target audiences and the communication strategies needed to reach those audiencescommunication strategies needed to reach those audiences Identifies the approach or appeal best suited to each targeted Identifies the approach or appeal best suited to each targeted

customer segmentcustomer segment

• Two key objectives of a POA:Two key objectives of a POA: Determine which promotional opportunities exist for the firmDetermine which promotional opportunities exist for the firm Identify the characteristics of each target audience so that Identify the characteristics of each target audience so that

precise advertising and marketing communications messagesprecise advertising and marketing communications messagescan reach the targeted audiencescan reach the targeted audiences

Promotions opportunity analysis (POA)Promotions opportunity analysis (POA)

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1)1) Perform communication market analysisPerform communication market analysis

2)2) Establish communication objectivesEstablish communication objectives

3)3) Create communications budgetCreate communications budget

4)4) Prepare promotional strategiesPrepare promotional strategies

5)5) Match tactics with strategiesMatch tactics with strategies

Five-step process for conducting a POAFive-step process for conducting a POA

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• A “SWOT” analysis of the organization from a A “SWOT” analysis of the organization from a marketing communications perspectivemarketing communications perspective

• Examines five key areas:Examines five key areas: Competitors Competitors OpportunitiesOpportunities Target marketsTarget markets CustomersCustomers Product positioningProduct positioning

• An effective communication market analysis lays the An effective communication market analysis lays the foundation for the development of MARCOM goalsfoundation for the development of MARCOM goals

Developing communications objectives is next step in Developing communications objectives is next step in promotions opportunity analysis (POA) process promotions opportunity analysis (POA) process

Step 1: Communication market analysisStep 1: Communication market analysis

These 5 areas are These 5 areas are studied together –studied together –rather than sequentiallyrather than sequentially

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Competitors Competitors

• Goal is to identify competitors and what they are doingGoal is to identify competitors and what they are doing in the promotional, marketing communications area in the promotional, marketing communications area

StrategicallyStrategically TacticallyTactically

• Sources of information and insight: Sources of information and insight: Advertisements and other promotional/MARCOM materialsAdvertisements and other promotional/MARCOM materials Annual reports Annual reports Web sitesWeb sites Trade journals and/or publicationsTrade journals and/or publications News articles News articles Primary research dataPrimary research data

Retail store visits (if applicable)Retail store visits (if applicable) Custom market research (customer interviews, surveys)Custom market research (customer interviews, surveys) Etc.Etc.

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Opportunities Opportunities

• Are there consumers that the competition is ignoring?Are there consumers that the competition is ignoring?

• Which markets are heavily saturated?Which markets are heavily saturated?

• Are the benefits of our products being clearly andAre the benefits of our products being clearly and compellingly communicated? compellingly communicated?

• Are there opportunities to extend our customer reachAre there opportunities to extend our customer reach and build customer relationships using a slightly and build customer relationships using a slightly different approach? different approach?

• Are there opportunities that are not being pursued? Are there opportunities that are not being pursued?

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Target markets Target markets

• What benefits does each target market want? What benefits does each target market want?

• How can each target market be reached?How can each target market be reached?

• What appeal works best for each target market? What appeal works best for each target market?

• What needs and wants of the target market are not What needs and wants of the target market are not being met by a competitor? being met by a competitor?

• What is the demographic and psychographic What is the demographic and psychographic makeup of each target market? makeup of each target market?

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Customers Customers

• There are 3 types of customers to analyze:There are 3 types of customers to analyze: Current company customersCurrent company customers Competitors’ customersCompetitors’ customers Potential new customersPotential new customers

• Key point is to understand how people in each of theKey point is to understand how people in each of the above groups: above groups:

ThinkThink What they buyWhat they buy Why they buyWhy they buy When they buyWhen they buy Where they buyWhere they buy How they evaluate a product after a purchaseHow they evaluate a product after a purchase

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Product positioning Product positioning

• “ “Positioning” is all about the perception created in thePositioning” is all about the perception created in the consumer’s mind regarding the nature of a company consumer’s mind regarding the nature of a company and its brands/products relative to the competition and its brands/products relative to the competition

• Examine the position the firm and its brand(s) have Examine the position the firm and its brand(s) have relative to its competitors relative to its competitors

And against the positioning strategies being pursued And against the positioning strategies being pursued Is the position perceived and/or being promoted consistentIs the position perceived and/or being promoted consistent with the company’s objectives and IMC program? with the company’s objectives and IMC program?

• (Review the 7 possible positioning strategies on page(Review the 7 possible positioning strategies on page 100, figure 4.2, in textbook) 100, figure 4.2, in textbook)

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Common communication objectives pursuedCommon communication objectives pursued: : • Develop or increase brand awarenessDevelop or increase brand awareness• Increase product category demandIncrease product category demand• Change customer beliefs or attitudesChange customer beliefs or attitudes• Enhance purchase actions and behaviorEnhance purchase actions and behavior• Encourage repeat purchasesEncourage repeat purchases• Build customer trafficBuild customer traffic• Enhance firm and/or brand imageEnhance firm and/or brand image• Increase market shareIncrease market share• Increase salesIncrease sales• Reinforce purchase decisionsReinforce purchase decisions

RememberRemember: : Communication objectives are derived from – and Communication objectives are derived from – and should reflect – the firm’s overall marketing objectives!should reflect – the firm’s overall marketing objectives!

Step 2: Establishing communication goalsStep 2: Establishing communication goals

Objectives mayObjectives maydiffer dependingdiffer dependingon the stage inon the stage inthe consumer’sthe consumer’sbuying processbuying processthat is beingthat is beingaddressed…addressed…

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Factors impacting relationshipFactors impacting relationshipbetween MARCOM and salesbetween MARCOM and sales

• The goal(s) of the promotionThe goal(s) of the promotion Communication goals will differ by buying process stageCommunication goals will differ by buying process stage

• Threshold effectsThreshold effects For new products, initial ads yield little behavioral responseFor new products, initial ads yield little behavioral response Behavioral response occurs with ad repetition over timeBehavioral response occurs with ad repetition over time

• Carryover effectsCarryover effects For products purchased only when needed, consumers need toFor products purchased only when needed, consumers need to be exposed to company’s message for so long that when time be exposed to company’s message for so long that when time comes to buy, the consumer remembers the firm/brand/product comes to buy, the consumer remembers the firm/brand/product

• Wear-out effectsWear-out effects At certain point, an ad/promotion simply becomes old or boring At certain point, an ad/promotion simply becomes old or boring

• Decay effects Decay effects When firm stops advertising, consumers begin to forget…When firm stops advertising, consumers begin to forget…

• Random events Random events

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Carryover effects are important in advertising products such as boats.

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Product positioning Product positioning

• “ “Positioning” is all about the perception created in thePositioning” is all about the perception created in the consumer’s mind regarding the nature of a company consumer’s mind regarding the nature of a company and its brands and products relative to the competition and its brands and products relative to the competition

• Examine the position the firm and its brand(s) have Examine the position the firm and its brand(s) have relative to its competitors relative to its competitors

And against the positioning strategies being pursued And against the positioning strategies being pursued Is the position perceived and/or being promoted consistentIs the position perceived and/or being promoted consistent with the company’s objectives and IMC program? with the company’s objectives and IMC program?

• (Review the 7 possible positioning strategies on page(Review the 7 possible positioning strategies on page 100, figure 4.2, in textbook) 100, figure 4.2, in textbook)

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Methods of determining the MARCOM budgetMethods of determining the MARCOM budget::• %-of-sales%-of-sales

Simple, clear approach – but may change in the opposite direction Simple, clear approach – but may change in the opposite direction

of what may be needed (e.g., when sales declines, budget declines)of what may be needed (e.g., when sales declines, budget declines) Does not allocate $$$ for special needs or to combat competitorsDoes not allocate $$$ for special needs or to combat competitors

• Match-the-competitionMatch-the-competition Somewhat defensive posture: May lead to inefficient use of $$$Somewhat defensive posture: May lead to inefficient use of $$$

• “ “What we can afford”What we can afford” Approach signals mgmt. does not recognize marketing benefits Approach signals mgmt. does not recognize marketing benefits

• Objective and taskObjective and task Best method because it links costs to specific objectivesBest method because it links costs to specific objectives However, is time-consuming and labor intensiveHowever, is time-consuming and labor intensive

• Payout planningPayout planning Establishes a ratio of advertising to sales or market shareEstablishes a ratio of advertising to sales or market share

• Quantitative modelsQuantitative models

Step 3: Creating a communications budget Step 3: Creating a communications budget

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• Communication strategies are broad, long-term Communication strategies are broad, long-term

guidelines for the IMC program guidelines for the IMC program Should be linked to opportunities and threats identified by the Should be linked to opportunities and threats identified by the

communication market analysis communication market analysis Should fit with the company’s overall message, image, themes, etc. Should fit with the company’s overall message, image, themes, etc.

• It is critical that the communications strategies be It is critical that the communications strategies be

directly related to a firm’s marketing plan and goals directly related to a firm’s marketing plan and goals

• Once strategies have been implemented, they are not Once strategies have been implemented, they are not

changed unless major new events occur changed unless major new events occur Only changes in the marketplace, new competitive forces, or newOnly changes in the marketplace, new competitive forces, or new

promotional opportunities should prompt firms to alter strategies promotional opportunities should prompt firms to alter strategies

Step 4: Preparing Promotional Strategies Step 4: Preparing Promotional Strategies

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• Tactics are activities performed to support strategiesTactics are activities performed to support strategies

• Examples of common tactics used: Examples of common tactics used: Specific advertisementsSpecific advertisements Sales promotionsSales promotions Personal selling enticements for sales representativesPersonal selling enticements for sales representatives Special product packages and labelsSpecial product packages and labels Price changesPrice changes Trade discounts to retailersTrade discounts to retailers Coupons, rebates, gift certificatesCoupons, rebates, gift certificates Bonus packs (a 2Bonus packs (a 2ndnd product attached to a first) product attached to a first) Contests and prizesContests and prizes Volume discounts Volume discounts

Step 5: Match tactics with strategies Step 5: Match tactics with strategies

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• Identify company strengths and weaknesses Identify company strengths and weaknesses

• Identify marketplace opportunitiesIdentify marketplace opportunities

• Match firm’s expertise with most lucrative marketsMatch firm’s expertise with most lucrative markets

• Clarify marketing objectives with target marketsClarify marketing objectives with target markets

• Focus budget on market segmentsFocus budget on market segments

• Link strategies and tactics to specific customer groups Link strategies and tactics to specific customer groups

Advantages to segmenting markets Advantages to segmenting markets

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• Individuals or businesses within the segment are similar in Individuals or businesses within the segment are similar in

nature – i.e., are homogenous across relevant dimensions nature – i.e., are homogenous across relevant dimensions Have the same needs, attitudes, interests, opinions, etc.Have the same needs, attitudes, interests, opinions, etc. Respond similarly to marketing mix elementsRespond similarly to marketing mix elements

• Market segment differs from the population as a wholeMarket segment differs from the population as a whole

…and is distinct from other market segments …and is distinct from other market segments

• Market segment must be large enough to be financiallyMarket segment must be large enough to be financially

viable to target with a separate marketing mix viable to target with a separate marketing mix

• Market segment must be reachable via some type of Market segment must be reachable via some type of

media or marketing communications method media or marketing communications method

Tests to determine if a particular market Tests to determine if a particular market segment is viable segment is viable

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• DemographicsDemographics

• PsychographicsPsychographics

• GenerationsGenerations

• Geography and/or geodemographicsGeography and/or geodemographics

• Benefits soughtBenefits sought

• Usage Usage

Ways to segment consumer marketsWays to segment consumer markets

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VALS 2VALS 2Psychographic segmentationPsychographic 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

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Psychographics and technologyPsychographics and technologyPsychographic segmentationPsychographic 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

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Generation segmentationGeneration segmentation

Gen. Y5% Gen. X

18%

Younger Boomer

26%

Older Boomer

24%

Empty Nester13%

Senior14%

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Generation segmentationGeneration segmentation Generation Y (18-24) – Clothes, automobiles,

college big ticket items. Spend heavily on TVs, stereos, and personal appearance.

Generation X (25-34) – Food, housing, transportation, and personal services primary emphasis. Time pressure so outsource daily tasks.

Younger Boomers (35-44) – 60% own home. Mortgage, home furnishings, home renovations major purchases. Spend remaining disposable income on pets, toys, playground equipment, and large recreational vehicles.

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Generation segmentation (con’t.)Generation segmentation (con’t.) Older Boomers (45-54) – Priorities are

upgrading homes, education and independence of children, luxury items, exotic vacations, insurance, and investments.

Empty Nesters (55-64) – 80% own homes. Mortgage, new furniture, new automobiles, personal indulges.

Seniors (65+) – Fixed incomes. Drugs, health insurance, and health care major expenditures.

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Ad targeted to senior citizens.Ad targeted to senior citizens.

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Geodemographic segmentationGeodemographic segmentation

Combines– Demographic census data– Geographic information– Psychographic information

PRIZM– 62 market segments– Southside City– Towns and Gowns

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• Industry NAICs/SIC codesIndustry NAICs/SIC codes

• Size of businessSize of business

• Geographic locationGeographic location

• Product usageProduct usage

• Customer valueCustomer value

F I G U R E 4 . 11Methods of segmenting B2B marketsMethods of segmenting B2B markets

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A B2B advertisement based on the product usage segmentation strategy...

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Understand the international market

A borderless marketing plan

Thinking globally but acting locally

Local partnerships

Communication segmentation strategies

Market communication analysis

Solid communication objectives

F I G U R E 4 . 1 2Successful globally integrated marketing communications tactics