Construct An Integrated Marketing Program

1. Step 3 in the Marketing Process (continued) Construct An Integrated Marketing Program

2. The Marketing Mix Promotion

3. Promotion • Promotion • Relates to the way a company or organization gets the attention of its target market—how it advertises, announces, publicizes, and pushes its products. • In other words, promotion is used to inform customers and persuade them to buy. • However, the role of promotion is greater than this. It is also used to influence opinions and attitudes toward an organization, person, or cause.

4. Promotional Mix • Promotional Mix • To accomplish the goals of promotion, organizations rely on a combination or mix of 1) advertising; 2) sales promotions; 3) public relations; and 4) personal selling. • Collectively these tools are known as the promotional mix. • Integrated Marketing Communications • An effective promotional program results from the careful selection and blending of these promotional mix elements. The process of coordinating the promotional mix and synchronizing the elements is called integrated marketing communications.

5. Elements of the Promotional Mix • Advertising • The paid, non-personal promotion of a company’s goods and services using mass media to influence consumers. • Some advertising media include: • Billboards, transit ads, and flyers (outdoor) • Newspaper and magazine ads (print); • Radio and television ads (electronic); • Yellow Pages (directory advertising) and • Banner ads, search engine marketing (interactive or digital). …continued on next slide

6. Elements of the Promotional Mix (continued) • Advertising(continued) • Common Techniques: • Repetition: Repeat ads frequently to maintain awareness and remind consumers to buy • Bandwagon Effect: Get others to use the product by telling them how many other people are using it. Puts their minds at each. (“Get on the bandwagon.”) For example, “4 out of 5 doctors” recommend Trident, or the “Number 1 movie in America.” • Testimonials: Convince consumers of the superiority of your product through the words of ordinary users, experts, etc.

7. Elements of the Promotional Mix (continued) • Sales promotion • Non-personal, persuasive efforts designed to boost a company’s sales immediately. Examples include: • Coupons, discounts, rebates, and other special pricing (e.g., two-for-one) offers; (QVC termed these artificial stimulants) • Contests and sweepstakes; • Sampling; • Free gift with purchase; and • Point-of-purchase/in-store displays. • Sales promotion also includes: • Use of specialty items, like pens and calendars imprinted with the company name, intended to keep the company’s name top-of-mind. (Some consider this a form of advertising, i.e. specialty advertising • Product placement in movies and on TV. (Some consider this a form of advertising as well)

8. Elements of the Promotional Mix (continued) • Public relations • The practice of conveying messages to the public through the media to influence people’s opinions about the company and its products. • Unlike advertising, these messages are unpaid, that is, the organization does not pay for the media space or time. However, it is a misnomer to refer to public relations as “free publicity.” The media is free, but it does cost money to create information that is newsworthy, i.e., worthy of being covered by the media, and bring this information to the attention of the media. • Public relations has a strong impact on consumers because it carries with it the implied endorsement of the impartial source in which it appears. • Event-related marketing, including creating events for the public to experience the company’s product or services, as well as sponsoring events, such as sporting events, is typically included in the public relations category.

9. Elements of the Promotional Mix (continued) • Personal selling • Direct, generally face-to-face, communication by salespeople with existing and potential customers to promote a company’s products. • Also an important part of building and maintaining relationships with customers. • Can also include telemarketing, although some opt to include this in a 5th promotional mix category called direct marketing, which is covered at the end of the promotional mix slides.

10. Selling Complex Products • When products are complex,customized, and expensive, they lend themselves to three personal selling approaches: • Technical selling: selling that requires a company’s sales representatives to impart detailed technical information to their customers. • Missionary selling: selling that occurs when a salesperson educates customers, builds goodwill, and performs promotional activities to encourage them to purchase a product at a later date. • Creative selling: selling that requires salespeople to combine their technical knowledge and personal selling experience to craft creative and unique ways to better meet the needs of their customers. • In some instances the salesperson is selling directly to the end user or final customer. In others, the salesperson might be selling to an intermediary, such as a dealer, distributor, or consultant.

11. Selling Standardized Products • Trade selling: involves managing the sale of one company’s products to other companies. For example, selling your products to distributors or retailers, who in turn, sell your products to others. It can also involve selling products to companies who use your product as an input for making their own products. For example, a food manufacturer selling to a restaurant. In trade selling, the customers understand what they are looking for, thus the selling process is less complex. The main task in negotiating—negotiating such issues as pricing, financing, and delivery. • Retail selling: selling to the final customer—a person who buys a product for his or her own use. Typically takes place in a retail setting, e.g., a store. • Telemarketing: a sales method used to contact prospective customers over the phone.

12. Stages in the Selling Process • Prospecting for customers • Making the initial contact • Making the sales presentation • Handling objections • Closing the sale • Doing after-sales service, follow-up, and information gathering • Sandler Sales

13. Word of Mouth Marketing: Where Does It Fit in the Promotional Mix • Word of mouth marketing is a very powerful form of promotion. It has several traits in common with public relations, but also shares some traits in common with personal selling. • Like public relations, the marketer does not pay the channel that disseminates the marketer’s message, in this case an individual. And like public relations, the message has added credibility because it is not being paid for. It appears to be an endorsement from a credible, unbiased source. • Like personal selling, the message is delivered person-to-person. • There is much marketers can do to encourage satisfied customers to spread the word. Among the steps: • Making sure customers are satisfied by exceeding their expectations; • Providing customers with the tools to more readily distribute information about your products and services; and • Providing suitable incentives—rewards that won’t comprise the independence and integrity of your customers—for helping to spread the word.

14. Marketing in Action QVC: A Different Form of Marketing • QVC represents a 5th form of promotion: direct marketing. • Direct marketing involves making direct connections with carefully targeted consumers to both obtain an immediate response, i.e., a sale, and cultivate lasting customer relationships. • In effect, direct marketing combines promotion and distribution. • Other forms of direct marketing include catalogues, direct mail, telemarketing, and infomercials.

15. The Marketing Mix Place (Distribution)

16. Place • Place • the distribution and sales channels used to get both a product and its marketing message to the customer

17. Distribution and the Sale of Products to Customers • Distribution • the selection of the distribution channels to reach and deliver products to customers most efficiently and effectively • Distribution channel • the specific method a company uses to sell and deliver its products to customers

18. Wide Variety of Distribution Channels Available • Companies can use a combination of distribution channels, especially when serving multiple market segments. • For example, Dell Computers is well known for selling directly to consumers via the Web. However, Dell uses a company sales force to serve large companies and the college market. • In addition, when trying to differentiate its products for different market segments, a company might use different types of channels. For example, selling a high end line of clothing at exclusive boutiques, and a more moderate priced line at department stores. Figure 10.9

19. Types of Distribution Channels • As illustrated on the next slide, there are four main distribution options companies can use: • Company-owned or licensed distributors • Wholesalers • Retailers • Direct distribution

20. The Four Main Product Distribution Channels Figure 11.1

21. Company-Owned or Licensed Distributors • Many companies opt to sell their products through a company-owned sales and distribution network. • Establishes a chain of sales and service centers and warehouses in the geographic areas it serves. • Advantage: Company has total control over the way its products are sold to customers. In other words, it controls the downstream value chain—all of the activities related to managing the product from the time it is made to the time it is delivered to the customer (see next slide). • The downside: Very complex and expensive. Can also limit expansion options, the geographic and market segments served by the company. • To reduce the costs but expand the company’s reach, some firms develop a network of licensed distributors or dealers, independent businesses that buy the rights to sell the firm’s products in a given area. For example, a car dealer. Another example: franchises.

22. Sales and Distribution Activities Involved in Managing the Upstream Value Chain Figure 11.2

23. Wholesalers and Retailers • Some companies use wholesalers and retailers, or retailers alone, to help distribute their products to the final customer. • Wholesaler: an intermediary or broker that buys products from manufacturers and then resells them to other companies, such as retailers, which in turn distribute them to the final customer. • Retailers: intermediaries who sell other companies’ products to the final customer.

24. Direct Distribution • Direct distribution: • Distribution channels used to deliver and sell products directly to the final customer. • In other words, there is no “middleman,” company owned or otherwise, to sell products to its final customer. • A company can use many different methods to directly reach the final customer, including: • Catalogue; • Advertisements in a variety of media the customer can respond to; • Company website; and • Company sales force.

25. The Distribution Mix and How It’s Chosen • Distribution mix: • the combination of channels a company selects to place, promote, sell, and deliver its products to customers • Affected by three main factors: • Product characteristics; • The importance of the purchase to the final customer; and • The need to customize a product. Figure 11.3

26. The Choice of Distribution Mix Figure 11.4

27. The Impact of the Product Life Cycle on Marketing Strategy & Tactics

28. The Product Life Cycle • Like people, products are born, grow, mature, and eventually decline. For products, this cycle is called the product life cycle. • As illustrated on the next slide, the product life cycle reflects the changes in demand for a product that occur over time. • The graph also show how profits change over time.

29. Introductory Stage Growth Stage Maturity Stage Decline Stage Product CategoryDemand or Sales Product CategoryProfits Dollars 0 Time Product Life Cycle 0

30. GROWTH MATURITY DECLINE INTRODUCTION More models & frequent changes Limited models Frequent changes Eliminate unprofitable models Large number of models Product Strategy Limitedwholesale/retail distributors Expand no. ofdealers & build long-term relationships Phase out unprofitable outlets Extensive. Margins shrink. Maintain shelf space. Distribution Strategy Aggressive brand ads topromote product advantages Phase outpromotion Advertise & promote heavily to maintain share. Awareness Stimulate primary demand Sampling Promotion Strategy Fall as result of competition &efficient production Prices continue to fall Prices stabilize at low level. Pricing Strategy High to recoupdevelopment costs Marketing Implications of the Product Life Cycle