Elements of the Promotion Mix

1. Elements of the Promotion Mix Advertising Ingredients of the Promotion Mix Public Relations Personal Selling Sales Promotion

2. The Communication Process Noise Sender Encoding Channel Decoding Receiver Channel

3. Goals and Tasks of Promotion Informing Reminding Target Audience Persuading

4. AIDA and the Hierarchy of Effects Purchase Conviction Preference Liking Knowledge Awareness Attention Interest Desire Action

5. When Elements of Promotion Are Most Useful Advertising Personal selling Effectiveness Sales promotion Public relations Awareness Knowledge Liking Preference Conviction Purchase Very effective Somewhat effective Either not effective or inefficient

6. Factors that Affect the Promotion Mix Nature of the Product Stage in the Product Life Cycle Target Market Characteristics Type of Buying Decision Available Funds $ $ $ Push–and–Pull Strategies

7. Creating a Promotion Plan Analyze the Marketplace Identify Target Market Set Promotion Objectives Develop Promotion Budget Choose Promotion Mix

8. Criteria for Setting Promotion Objectives Promotion objectives should: be measurable, concrete be based on sound research, with a well-defined target audience be realistic reinforce the overall marketing plan and relate to specific marketing objectives

9. Examples of Promotion Objectives Objective: ToInform (Awareness) To increase the top-of-mind awareness level for Peter Pan peanut butter from 16 percent to 24 percent Objective: To Persuade (Attitudinal) To increase the percentage of parents who feel that Peter Pan peanut butter is the best peanut butter for their children from 22 percent to 35 percent Objective: To Remind To remind consumers that Peter Pan peanut butter is the creamiest peanut butter and is available at their nearest grocery and convenience stores

10. Techniques for Setting Promotion Budgets • Arbitrary Allocation • All - You - Can - Afford • Competitive Parity • Percent of Sales • Market Share • Objective and Task

11. Regulation of Promotion Self-Regulation • National Advertising Division (NAD) • National Advertising Review Board (NARB) Federal Regulation • Federal Trade Commission (FTC)

12. Effects of Advertising Diminishing returns on additional spending Increasing efficiency as ad budget becomes sufficient Return on Advertising Expenditures Advertising Spending

13. Major Types of Advertising Corporate Image Institutional Advertising Advocacy Advertising Types of Advertising Pioneering Product Advertising Competitive Comparative

14. Advertising Campaign Decision Process Determine the campaign objectives. Make creative decisions. Make media decisions. Evaluate the campaign.

15. Common Advertising Appeals Profit Save money, keep from losing money Health Body-conscious, healthy Love or Romance Sell cosmetics and perfumes Fear Social embarrassment, growing old, losing health, power Admiration Celebrity endorsement effective Convenience Fast-food and microwave products Fun and Pleasure Vacations, beer, amusement parks Vanity and Egotism Expensive, conspicuous items

16. Executional Styles for Advertising Scientific Slice-of-Life Musical Lifestyle Common Executional Styles Demon- stration Spokes-person/ Testimonial Mood or Image Fantasy Real/ Animated Product Symbols Humorous

17. Methods Used to Evaluate Advertising Campaigns Pretests Examples: • Consumer jury tests • Portfolio or unfinished rough tests • Physiological tests Post-tests Examples: • Recognition tests • Recall tests • Attitude measures • Audience size measurement

18. The Tools of Public Relations New Product Publicity Product Placement Major Tools Used By PR Professionals Customer Satisfaction Phone Lines Consumer Education Event Sponsorship Issue Sponsorship Web Sites

19. Types of Consumer & Sales Promotion Goals Type of buyer Desired results Sales promotion examples Loyal customers Reinforce behavior, • Loyalty marketing programs, People who buy your increase consumption, such as frequent-buyer cards product most or all change purchase timing or frequent-shopper clubs of the time • Bonus packs that give loyal consumers an incentive to stock up or premiums offered in return for proofs-of-purchase Competitor’s Break loyalty, persuade • Sampling to introduce your customers to switch to your brand product’s superior qualities People who buy a compared to their brand competitor’s product • Sweepstakes, contests, or most or all of the time premiums that create interest in the product Brand switchers Persuade to buy your • Any promotion that lowers the People who buy a brand more often price of the product, such as variety of products coupons, price-off packages, in the category and bonus packs • Trade deals that help make the product more readily available than competing products Price buyers Appeal with low prices • Coupons, price-off packages, People who or supply added value refunds, or trade deals that consistently buy the that makes price less reduce the price of brand to least expensive brand important match that of the brand that would have been purchased Source: From Sales Promotion Essentials, 2E by Don. E. Schultz, William A. Robinson, and Lisa A. Petrison. Reprinted by permission of NTC Publishing Group, Lincolnwood, IL.

20. Tools for Consumer Sales Promotion Coupons Premiums Six Categories of Consumer Sales Promotions Frequent Buyer Programs Contests and Sweepstakes Samples Point-of-Purchase Displays

21. Trade Allowances Push Money Six Categories of Trade Sales Promotions Training Free Merchandise Store Demonstrations Business Meetings, Conventions, Trade-Shows Tools for Trade Sales Promotion

22. Advantages of Personal Selling Detailed Information Message Control Targeted Cost Control Closing Sales

23. Advertising Versus Personal Selling Personal Selling is more important if... The product has a high value. It is a custom-made product. There are few customers. The product is technically complex. Customers are geographically concentrated. Advertising/Sales Promotion is more important if... The product has a low value. It is a standardized product. There are many customers. The product is simple to understand. Customers are geographically dispersed.

24. Differences Between Traditional & Relationship Selling Traditional Personal Selling Sell products (goods and services) Focus on closing sales Limited sales planning Spend most contact time telling customers about product Conduct “product-specific” needs assessment “Lone-wolf” approach to the account Proposals and presentations basedon pricing and product features Sales follow-up focused on product delivery Relationship Selling Sell advice, assistance, and counsel Focus on improving the customer’s bottom line Considers sales planning as top priority Spend most contact time attempting to build a problem-solving environment with the customer Conduct discovery in the full scope of the customer’s operations Team approach to the account Proposals and presentations based on profit impact and strategic benefits to the customer Sales follow-up is long term, focused on long-term relationship enhancement Source: Robert M. Peterson, Patrick L. Shul, and George H. Lucas, Jr., “Consultative Selling: Walking the Walk in the New Selling Environment,” National Conference on Sales Management, Proceedings, March 1996.

25. Steps in the Selling Process Generating Sales Leads Qualifying Sales Leads Basic Steps in the Selling Process Making the Sales Approach Making the Sales Presentation Handling Objections Closing the Sale Following Up

26. Functions of Sales Management Set Sales Objectives Evaluate Sales Force Structure Sales Force Major Tasks of Sales Management Manage Turnover Determine Sales Force Size Motivate Sales Force Develop Compen-sation Plan Train Sales Force Recruit Sales Force

27. 200 150 100 50 0 1 2 3 4 5 6 7 8 9 10 Cost Determinants of Price MC ATC Dollars AVC AFC Quantity

28. Break-Even Analysis Total Revenue Profits Break Even Total Costs Price ($) Fixed Costs Losses Quantity (units)

29. Steps in Setting the Right Price Establish Pricing Goals Estimate Demand, Costs, and Profits Choose Strategy Fine-Tune Base Price $ $ $ $ $ $ $ $ Right Price

30. Legal and Ethical Issues in Pricing Unfair Trade Practices Key Legal and Ethical Issues Related to Price Price Fixing Price Discrimination Predatory Pricing

31. Cash Discount EDLP Quantity Discount Seasonal Discounts Functional Discount Promotional Allowances Trade Loading Rebates Discounts, Allowances, and Rebates Price Reductions

32. Geographic Pricing FOB Origin Uniform Delivered Pricing Tactics Based on Geography Zone Pricing Freight-Absorption Basing-Point

33. Special Pricing Tactics Single Price Two-Part Pricing Flexible Pricing Common Special Pricing Tactics Bundle Pricing Professional Services Odd-Even Pricing Price Lining Bait Pricing Leader Pricing