Promotional Concepts & Strategies

Ch. 17 ME

Promotion and Promotional Mix

Section 17.1

Promotion – is persuasive communication Informs people about their products and services To enhance public image and reputation, and persuade people

that their products are valuable Product Promotion – to convince prospects to select its

products or services instead of a competitor’s brands Promotional activities explain the major features and benefits Helps companies foster good relations with existing customers

Institutional Promotion – is used to create a favorable image for a business, help it advocate change, or take a stand on trade or community issues

Example: maintaining an informational Web site

The Concept of Promotion

1. Personal Selling2. Advertising3. Direct Marketing4. Sales Promotion5. Public Relations

Type of Promotion in the Promotional Mix

Personal Selling – requires that a company employ sales representatives who generate and maintain direct contact with prospects and customers

Costliest form of promotionAdvertising – is a form of non-personal promotion

Pay to promote ideasCan be found anywhereIs “one-way” communication

Type of Promotion in the Promotional Mix

Direct Marketing – is a type of advertising directed to a targeted group of prospects and customers rather than to a mass audience

Two forms:Direct Mail – sent via regular mail to a home or businessElectronic Direct mail – e-mail

Goal – to generate sales or leads for sales representatives to pursueGives recipients an incentive to respondIs “one-way” communication

Type of Promotion in the Promotional Mix

Sales Promotion – represents all marketing activities – other than personal selling, advertising, and public relations – to stimulate purchasing and sales

According to American Marketing Association (AMA)Objectives:

Increase salesInform potential customers about new productsCreate a positive business or corporate image

Type of Promotion in the Promotional Mix

Public Relations (PR) – activities enable an organization to influence a target audience

Try to create a favorable image for a company, its products, or its policiesGoal – to cultivate media relations with reporters who cover a specific industry

Type of Promotion in the Promotional Mix

News Release – is an announcement that is sent to the appropriate media outlets

Publicity – is one tactic that public relations professionals use Placement - Involves bringing news or newsworthy

information about an organization to the public’s attention

Main function – is to develop a positive perception or awareness of an organization in the marketplace

Advantages – free; viewed as more objective; appears more credible

Disadvantages – is content; not easily controlled; negative stories

Writing News Releases

Promotional Mix – a combination of strategies and a cost-effective allocation of resources Business follow a series of steps that range from

identifying the target to measuring the results Strategies are designed to compliment one another Elements must be coordinated Sales personnel need to be aware

Promotional Budget – is a percentages of sales, or dictated by revenue and operational costs, to set an amount allocated for promotion use

The Concept of the Promotional Mix

The Push-Pull Concept Push Policy – to promote a product to large retailers to

sell its products, a manufacturer may to use a mix of personal selling, advertising and buying discounts Is used only with the next partner in the distribution

channel Main Purpose – is to convince a retailer to stock the

products being promoted Pull Policy – use a different promotional mix of local

and national advertising, in-store displays, sales promotion, and public relations to reach consumers Directs promotion towards consumers

The Concept of the Promotional Mix

Type of Promotion1. Section 17.2

Sales Promotion – are incentives that encourage customers to buy products or services Used to encourage customers Supported by advertising Either business-to-business (B2B) or business-to-

consumer (B2C)

Sales Promotion

Trade Promotions – are sales promotion activities designed to get support for a product from manufactures, wholesales, and retailers More money is spent on promoting to businesses than

consumers Need good business ethics to be fair Major Trade Promotions include:

Promotional allowances Cooperative advertising Slotting allowances Sales force promotions Trade show and conventions

Trade Promotions

Promotional Allowances – represent cash payments or discounts given by manufacturers to wholesalers or retailers for performing activities to encourage sales

Cooperative Advertising – a manufacturer supports the retailer by helping to pay for the cost of advertising its product likely

Slotting Allowances – is a cash premium paid by a manufacturer to a retailer to help the retailer cover the costs of placing the manufacturer’s product on the shelves

Sales Force Promotion – are awards given to dealers and employees who successfully meet or exceed a sales quota

Trade Shows & Conventions – showcase a particular line of products

Trade Promotions

Consumer Promotions – are sales strategies that encourage customers and prospects to buy a product or service Support the components of the promotional mix Major consumer sales devices include:

Coupons Premiums Deals Incentives Product Samples Sponsorship Promotional Tie-Ins, Cross-Promotion, & Cross-Selling Product Placement Loyalty Marketing Programs Online Loyalty Marketing Point-to-Purchase Displays

Consumer Promotions

Coupons – are certificates that entitle customers to cash discounts on goods or services

Premiums – are low-cost items given to consumers at a discount or for free Three types are:

Factory Packs – are free gifts places in product packages Traffic Builders – are low-cost Coupon Plans – are ongoing programs offering a variety

of premiums in exchange for labels or coupons obtained from a product or label

Consumer Promotions

Deals (price packs) – offer short-term price reductions that are marked directly on the label or package

Incentives – create customer excitement and increase sales Are higher-priced products earned and given away

through: Contests – are games or activities that require the

participant to demonstrate a skill Sweepstakes – are games of chance Rebates – are discounts offered by manufacturers to

customers who purchase an item during a given time period

Consumer Promotions

Product Samples – is a free-trial size of a product sent through the mail, distributed door-to-door, or given away to retail stores and trade shows

Sponsorships – company pays a fee for the to promote itself and its products or services at or on a set location Negotiate the right to use logos and names on retail

products High-profile promotional medium Title Sponsor – is an organization that pays to have its

name incorporated into the name of the sponsored location

Consumer Promotions

Promotional Tie-Ins (Cross-Promotion, & Cross-Selling) - involve sales promotional arrangements between one or more retailers or manufacturer Partners combine their resources to conduct a

promotion that will create additional sales for each partner

Can be complex and involve several companies Increasingly popular on the internet

Product Placement – is a consumer promotion that involves using a brand-name product in a movie, television show, sporting event, or even in a commercial for another product

Consumer Promotions

Loyalty Marketing Program (frequent buyer program) – reward customers for patronizing a company Customer Loyalty – means that customers are so

satisfied with a brand or retailer that they continue to buy that brand or patronize that retailer even when they have other from which to choose

Online Loyalty Marketing – online version, offered by web only companies, of loyalty marketing

Point-of-Purchase Displays – are displays designed primarily by manufacturers to hold and display their products Usually placed in high traffic areas and promote impulse

purchases

Consumer Promotions