Promotional Mix

1. Promotional Mix • Advertising – paid form of nonpersonal communication by an identified sponsor • Personal Selling – interpersonal communication with potential customers for an identified sponsor • Public Relations – nonpaid, nonpersonal communication without a sponsor • Sales Promotions – activities not covered in other three used to stimulate consumer demand Chapter 10.1

2. Communications Model Noise Sender Message Channel Receiver Feedback Chapter 10.2

3. Functions of Advertising and Promotion • Present information to the consumer • Reinforce consumer behavior • Induce first-time patronage • Enhance the image of the firm Chapter 10.3

4. Promoting over the Product Life Cycle • Introduction – attract innovators and build volume using all the elements of the promotional mix • Growth – use advertising and personal selling to build brand recognition and differentiate from competition • Maturity – maintain customer base using reminder advertising and use sales promotions as short-term inducements for customers to switch brands • Decline – keep loyal customers with limited advertising and sales promotions Chapter 10.4

5. Value of Promotional Budgets • To provide a detailed projection of future expenditures • To provide both short- and long-range planning guides for management • To provide a method for monitoring and controlling promotional expenses Chapter 10.5

6. Budgeting Methods • Percentage-of-sales – simple, ties advertising to sales, most popular method • Desired objective – best theoretically, forces management to consider objectives, difficult to apply • Competitive parity – simple, focuses on competition, may be too reactive, assume competitors know what they are doing • All-you-can-afford – last resort, may be only viable option for small operations after meeting obligations Chapter 10.6

7. Chapter 10.7

8. Forms of Advertising • National Advertising • Local Advertising • Cooperative Advertising Chapter 10.8

9. Advertising Strategy Development • Focus on objectives • Choose a target audience • Determine key consumer benefits • Be able to support claims • Use tone and manner to create a “personality” Chapter 10.9

10. Developing a Central Appeal • Must offer some value to the customer • Must be distinctive • Must be believable • Should be simple Chapter 10.10

11. Keys to Successful Advertising • Allocate enough time • Allocate adequate resources • Analyze the firm’s position • Analyze the market • Carefully select the media • Form an advertising plan Chapter 10.11

12. Campaign Checkpoints • Maintain visual similarity • Maintain verbal similarity • Maintain similarity of sound • Maintain similarity of attitude Chapter 10.12

13. Chapter 10.13

14. Evaluating an Advertising Campaign • Copy testing • Inquiry and sales • Coupons and split runs • Sales tests • Consumer testing of awareness, recall, and attitude Chapter 10.14

15. Advantages Agency can increase the effectiveness of the advertising campaign Can handle special media production requirements Staff of specialists Closer contacts with media representatives Consulting and marketing research Disadvantages Expensive May duplicate expertise or services already available Loss of control Using an Advertising Agency Chapter 10.15

16. Advertising Agency Services • Study client’s product in relation to competition • Analyze current and potential markets • Provide leadership and direction in selecting media • Formulate a detailed plan • Execute the plan • Verify placements • Evaluate campaign effectiveness Chapter 10.16

17. Agency Compensation • Commissions from media • Fees or retainers paid by client • Service charges for creative work • Markups on outside purchases • Trade-outs Chapter 10.17

18. Effects of Advertising • Social and Ethical Criticisms • Can be misleading or deceptive • Can be offensive or in poor taste • Encourages materialism • Encourages people to buy things they don’t need • Economic Effects • Effects on consumer choice • Effects on competition • Effects on product costs and prices Chapter 10.18