UNIT F MANAGEMENT OF DISTRIBUTION, PROMOTION, AND SELLING

1. UNIT FMANAGEMENT OF DISTRIBUTION, PROMOTION, AND SELLING 10.03 Organize promotional activities to maximize return.

2. Promotional mix The combination of all types of communication and a cost-effective allocation of resources used by a business to inform, persuade, or remind consumers about a company and/or its products. • Advertising • Sales promotion • Public relations • Personal selling • Direct marketing

3. Advertising Any paid form of nonpersonal presentation of ideas, goods, or services made by an identified sponsor. • Low cost per contact • Repeatedly reaches many people over a large area • Advertiser controls content, frequency, and choice of media vehicle • Expensive total cost • May not reach the targeted audience • Provides only one-way communication

4. Sales promotion “All marketing activities, other than personal selling, advertising, and public relations, that are used to stimulate purchasing and sales.” (AMA) • Generates immediate short-term sales • Supports other parts of the promotional campaign • Expensive • Company may lose money

5. Public relations Activities to build rapport with the company’s various publics by obtaining favorable publicity, building a good corporate image, and handling or heading off unfavorable rumors, stories, and events. • Low cost or free • Credible • Not always controlled by the business • If negative, can be destructive

6. Personal selling Personalized, two-way communication between the sales staff and the customer designed to complete sales and build customer relationships. • Person-to-person interaction • Immediate feedback • Most expensive promotion per contact • May not result in a sale

7. Direct marketing Direct communication with carefully targeted individual consumers to obtain an immediate response and to cultivate lasting customer relationships. • Reaches the targeted group(s) • Can customize promotion and products to the target market • Technology failure or interruptions • Public resentment of the invasion of privacy

8. Integrated marketing communications (IMC) The concept under which a company carefully coordinates its promotional mix elements to communicate a clear, consistent, and compelling message about the organization and its products. • Utilizes a well-planned single strategy • Clearly shows how customers’ problems can be solved by the company and its product(s)

9. Integrated marketing communications (cont.) • Improves the customer relationship over time through effective communications management • Reduces or eliminates the confusion that results when the various types of communications send conflicting messages

10. Integrated marketing communications (cont.) • Blends the promotion tools into a coordinated promotional mix • Considers the advantages and disadvantages of each promotional mix element • Often uses a different promotional mix strategy for each segment of the distribution channel

11. Integrated marketing communications (cont.) • Promotion mix strategies • Push strategy: A promotion strategy that calls for using the sales force and trade promotion to push the product through channels. • The producer promotes the product to wholesalers, the wholesalers promote to retailers, and the retailers promote to consumers.

12. Integrated marketing communications (cont.) • Promotion mix strategies • Pull strategy: A promotion strategy that calls for spending a lot on advertising and consumer promotion to build up consumer demand. • If the strategy is successful, consumers ask retailers for the product, the retailers ask the wholesalers, and wholesalers buy from the producers.

13. MANAGEMENT OF PROMOTION • Responsibilities • Determine the mix. • Establish the budget. • Allocate the resources. • Coordinate the campaign. • Supervise an outside resource. • Evaluate the results.

14. MANAGEMENT OF PROMOTION (cont.) • Kinds of decisions required • What schedule to follow for promotions • How frequently to run advertisements • Whether to use sales demonstrations in stores and/or product demonstrations in trade or consumer shows • Whether to communicate directly with each consumer or to use impersonal messages to a mass audience • What kind of information to communicate

15. MANAGEMENT OF PROMOTION (cont.) • Factors that influence decisions • Type of product • Product price • Total company budget for promotions • How to divide the budget across the mix • What promotion competitors are using • What information consumers need to make a buying decision • Consumer characteristics

16. Planning the advertising campaign • Identify the target audience. • Determine the advertising objectives. • Calculate the expected/required return on investment. • Set the advertising budget. • Develop the advertising strategy. • Evaluate the advertising campaign.

17. Planning the advertising campaign (cont.) • Determine the advertising objectives. • Advertising objective: A specific communication goal to be accomplished with a specific target audience during a specific period of time. • Informative advertising. Used to introduce a new product or provide other informational messages • Persuasive or comparative advertising. Carries the risk of starting a “war” which neither competitor can win • Reminder advertising. Used to maintain attention to mature products

18. Planning the advertising campaign (cont.) • Calculate the expected/required return on investment. • (Increase in sales ÷ the amount of investment) X 100 = percent of return on investment. • An advertising event that will not accomplish required return should not be implemented.

19. Planning the advertising campaign (cont.) ►Set the advertising budget. • Affordable method: A process of setting the promotion budget at the level management thinks the company can afford. • Percentage-of-sales method: A process of setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price.

20. Planning the advertising campaign (cont.) Set the advertising budget. (cont.) • Competitive-parity method: A process of setting the promotion budget to match competitors’ spending. • Objective-and-task method: A process of setting the promotion budget by defining specific objectives, determining the tasks that must be performed to achieve these objectives, and then estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.

21. Planning the advertising campaign (cont.) ►Develop the advertising strategy. • Create the advertising message. • Headline • Copy • Illustrations/video • Sponsor identification

22. Planning the advertising campaign (cont.) Develop the advertising strategy. (cont.) • Select appropriate advertising media. • Reach: A measure of the percentage of the people in the target market who are exposed to the ad campaign during a given period of time. • Frequency: A measure of how many times the average person in the target market is exposed to the message. • Media impact: The qualitative value of a message exposure through a given media. • Choose among major media types. • Select specific media vehicles. • Decide on media timing.

23. Planning the advertising campaign (cont.) ►Evaluate the advertising campaign. • Have consumer opinions changed? • How do past sales and expenditures compare with current sales and expenditures?

24. Planning for sales promotion activities • Review sales promotion objectives. • Use sales promotion tools. • Develop the sales promotion program.

25. Planning for sales promotion activities (cont.) • Use sales promotion tools. • Consumer promotion tools • Samples • Coupons and rebates • Price packs and special “deals” • Premiums • Advertising specialties • Patronage rewards • Point-of-purchase (POP) promotions • Contests, sweepstakes, games • Product placement • Sponsorships

26. Planning for sales promotion activities (cont.) • Use sales promotion tools. (cont.) • Trade promotion tools • Discounts • Promotional allowances • Slotting allowances • Cooperative advertising • Free goods • Specialty advertising items

27. Planning for sales promotion activities (cont.) • Use sales promotion tools. (cont.) • Business promotion tools • Conventions and trade shows • Sales contests

28. Planning for sales promotion activities • Develop the sales promotion program. • Determine the size of the incentive. • Set conditions for participation. • Determine the length of the promotion. • Carry out the program. • Evaluate the program.

29. Planning for public relations opportunities • Consider which functions to emphasize. • Consider the role and impact of public relations. • Use major public relations tools.

30. Planning for public relations opportunities (cont.) • Consider which functions to emphasize. • Press relations to attract attention through the media • Product publicity • Public affairs to build community relations • Lobbying to influence legislation and regulation • Investor relations • Development to gain financial or volunteer support

31. Planning for public relations opportunities (cont.) • Use major public relations tools. • Speeches • Special events • Mobile marketing • Written materials • Audiovisual materials • Corporate identity materials • Public service activities

32. Planning for direct marketing approaches • Direct mail and fax advertising • E-mail and Internet advertising

33. Planning for personal selling • Sales staff training • Procedures for maintaining sales staff awareness of current promotions