Describe how promotional tools work together to educate consumers and generate sales
Promotion is one of the primary elements used in the marketing mix. Thus, promotional efforts should work in harmony with product marketing, pricing, and distribution actions that target prospects and customers. When assembling a promotional plan, marketers typically employ one or more of the following five promotional subcategories: personal selling, advertising, sales promotion, direct marketing, and publicity (or public relations).
These communication tools serve as tactics within the promotional plan to accomplish objectives such as:
As organizations implement their promotional plan, they also seek to educate consumers, increase consumer demand, and differentiate their products and services in the marketplace .
Increased market segmentation, information technologies, and digital communications have created new ways for promoting products across different media. Today, organizations can create online banner advertisements, social networking websites, blogs, and search engine optimization campaigns to promote their products and services. However, traditional promotional tools such as special events, celebrity endorsements, in-store coupons, and newspapers are also employed to entice customers to purchase goods. For example, retailers often use promotional tactics including discounts, store rebates, free items, contests, and other special offers to drive new sales and repeat purchases.
The promotional tools used to educate customers and generate sales vary depending on the organization’s objective. Because public relations (PR) focuses on influencing and shaping public opinion, PR efforts are useful for building brand value and generating positive stories around products and services. Events, which often generate publicity, can serve long-term objectives for building partnerships with external stakeholders, strengthening customer loyalty and enhancing industry credibility.
However, organizations may choose to use short-term mechanisms such as sales promotions and coupons to generate immediate customer interest and revenue. Direct mailers or email newsletters further support these incentives to prompt customer action and purchases. Print, television, radio, and online advertising can be used to promote all of these activities and drive sales for the organization. These promotional tools are even more effective when built into an integrated marketing communication strategy, since all communications work together simultaneously to multiply consumers’ exposure to brand messaging.
Describe the techniques used to persuade consumers to purchase products over competing brands
To convince consumers that their products possess advantages over similar brands, companies focus on differentiating their brands using various promotional tactics. Advertising, personal selling, sales promotion, and public relations activities are commonly used to persuade consumers to make a purchase. Brands constantly promote product features and benefits to convince consumers that their products either address the consumer’s needs or solve a particular problem. By promoting their brand in creative and compelling ways, companies hope to create positive esteem and loyalty toward the brand to fuel repeat purchases and customer retention.
When running promotional programs, companies seek to clearly and effectively market their product’s differential factor. Differentiation sets similar products apart from one another, and creates value for consumers evaluating different brands. Differentiating products allows companies to influence consumers’ perception of their brand in an increasingly crowded marketplace. If the product’s differential factor is compelling enough, companies hope to convince consumers to continually choose their products over competitors.
Companies employ a myriad of techniques to shape consumers’ perception of the physical products displayed in stores or on the street. Common persuasive techniques include:
Colors and imagery can serve as powerful visuals for quickly conveying a product’s ability to successfully meet consumer needs. For instance, colors such as yellow and orange provoke excitement while blue and green establish trust, cleanliness, and calmness. As more consumers spend their time surfing the Internet on computers and mobile devices, similar strategies are used in online promotions such as banner ads and email communications. Digital communications, like traditional communications, rely on captivating and clever messaging to prompt open rates and click-throughs to advertisers’ landing pages. With social media, companies have the ability to advertise their product’s differential qualities to any person in the world, at any given instant.
The primary objective of marketers and advertisers is to present ideas in a manner that is so convincing that consumers will not just purchase a product or service once, but will do so repeatedly over time. Companies must thus remind customers of their product’s unique benefits using messaging that resonates with consumer needs and values. Branding, product marketing, and loyalty marketing all form part of the customer proposition – the subjective assessment by the customer on whether to purchase a brand based on the value they receive from each of these marketing elements.
As companies compete for consumer attention across print, television, radio, and the Internet, promotional tools such as reward and discount programs are repeatedly offered to loyal customers in return for their continued business. The airline industry’s frequent flyer program is a successful example of loyalty marketing. These programs rely on the earned loyalty of current customers to attract new loyalty from future customers. However, exclusive incentive programs must strike a balance between increasing benefits for new customers over any existing loyalty plan they are currently in and keeping existing customers from moving to new plans.
Companies look to be brand leaders in their industry by providing consumers with relevant information on product pricing, functionality, and availability. Providing consumers and other brand stakeholders with the skills, concepts, and understanding required to achieve maximum satisfaction and utilization of the product can transform consumer needs into perceived wants. Even after a purchase is made, companies devote sales and customer service teams to supporting customers with training and other educational programs. This idea is especially true for highly technical products such as computer software, which regularly release upgrades and new features.
Reviews of products in trade publications and on websites can also help promote or downgrade products. Consumers may include review and rating websites such as yelp.com or consumer reports as part of their education on product features and benefits. These reviews also serve as indirect public relations for the brand, potentially enhancing and strengthening brand value. Outside consumer opinions and expert insight fall under the arsenal of promotional tools that can persuade consumers during the buying decision process.
Personal selling functions as an essential component within a company’s larger integrated marketing communications strategy. Customer sales are the lifeblood of a business, contributing directly to the company’s bottom line. Before closing a sale or launching promotional activities, organizations must first understand the needs, wants, and habits of their target audience. Identifying these prospects or potential customers early in the sales process is key to keeping a company’s sales pipeline full. Generating a steady flow of prospective customers into this sales pipeline builds consistent revenue streams, ensuring longevity for the organization.
Prospecting for customers is the first step in personal selling. Consequently, identifying and maintaining a steady list of prospects is usually a salesperson’s top priority. As a company introduces and markets new products, the number of customers will fluctuate depending on the needs of its target market. It is the salesperson’s job to continually replace these former customers to maintain and increase sales.
Prospects are usually labeled as sales leads, which can eventually be converted into contacts and opportunities. For sales prospecting to be an effective component of integrated marketing communications, organizations implement sales methodologies to qualify and track the conversion rate of sales leads. These systems are also used to map the different marketing communication touchpoints that help funnel leads into the organization’s sales process.
Before an organization begins marketing to prospects, they must conduct extensive research and analysis on their potential market. Ideally, the organization’s salespersons are also working with marketers who are supplying marketing analysis to support sales efforts. Likewise, communications including websites, events, public relations, advertising, and social media are all promotional tools helping to drive prospects towards the organization.
The marketing and sales teams’ market analysis validates if a strong correlation exists between product benefits and customer needs. This entails finding out customers’ requirements, priorities, and budget. Other data companies use to build customer profiles include psycho-demographic characteristics such as age, sex, profession, personal interests, and buying habits. If the potential market is very large, then organizations must decide whether to target specialized segments to save time and money. Companies that are able to tailor their products or services to a specific niche market can develop a unique selling proposition (USP) in that particular market segment. A brand’s USP enables it to enter markets where there is less competition and greater potential to build brand equity and recognition. It can also shorten time to sale. The longer companies spend marketing to prospects, the more people and financial resources are spent to close a sale and generate revenue.
After researching and identifying their target market, organizations use promotional tools including cold-calling, trade shows, direct mailings, product seminars, webinars, and advertisements toward leads generation. Organizations also use these tools to build mailing lists for newsletters and other promotional activities to nurture relationships with prospects and guide them further along the buying process. Organic search engine results and word-of-mouth referrals, particularly through social media and other digital channels, can also be powerful tools for identifying potential customers. Many organizations focus on building a strong web presence using effective search engine optimization, along with both traditional and digital communication channels, to generate new leads.
Running a product trial is a common promotional tactic used by brands looking to enter a new market, release a new product, or increase existing sales. It is particularly useful for targeting specific audiences who are loyal to specific brands or are price-conscious. Product trials include free samples, price reductions, or other purchase incentives designed to encourage consumer use during and after the trial.
Product trials are useful when companies need to adjust parts of their marketing communications strategy to successfully target a market segment. For example, college students may be particularly budget-conscious and choose products based on price rather than quality or popularity. Repackaging the offering so that students can “test drive” the product allows students to assess whether product benefits outweigh price and other factors during the buying process.
To encourage consumers to participate in free trials, brands can bundle their offers with other incentives and discounts. Perks such as free shipping and handling and future coupons can all drive consumers toward making a purchase after the end of the free trial period.
Adjusting these three variables – price, product, and place (distribution or location) – enhances both the trial offer and the appeal of the final product or service. Developing communications for selected audiences most receptive to the brand’s offer, reduces time and money spent on implementing promotional programs.
Some of the promotional tactics companies employ to encourage consumer participation in product trials include:
Discuss the psychological factors that drive consumer demand, and how they play into marketing segmentation
Factoring consumer wants and needs is an essential component to assembling a successful marketing communications strategy. In the late 19th and early 20th centuries, most companies focused on producing products and services with little emphasis on customer needs and wants. Greater attention was given to the product or service, rather than understanding consumer behavior .
Given the emergence of globalization and information technologies in the last decade, new markets and increased competition have forced marketers to modify the traditional approach to marketing communications. Companies are now increasingly focusing on how to stimulate consumer demand and compete for customer loyalty. For brands to successfully compete, they must understand the consumer needs that lie at the center of marketing communications.
For there to be a demand for products and services, there must be consumer need and motivation. The field of psychology defines motive as the inner drive or pressure to take action to satisfy a need. Motives produce goals, which can be positive or negative for the individual. In all cases, the need must be aroused or stimulated to a high enough level so that it can serve as a motive. It is possible and common to have latent needs that do not serve as the motive of behavior. The sources of this arousal may be internal (such as hunger); environmental (viewing a McDonald’s advertisement); or psychological (thoughts about food, which can cause hunger). For motivation to be useful in stimulating demand for products, brands must understand what motives and behaviors are influenced by the specific situation in which consumers engage in goal-directed, problem-solving behavior.
The difficulty of defining motives and dealing with motivation in consumer research accounts for its limited application in marketing. For the most part, the research in motivation involves benefit segmentation and patronage motives. Patronage motives typically concern the consumer’s reasons for shopping at a particular outlet. Benefit segmentation may include consumer labels such as price-conscious, convenience-oriented, service-oriented, or other motivation features. Factors including age, sex, lifestyle, profession, income, educational level, and personal interests have all been used to assemble personality profiles designed to decode consumer motives.
Knowing the basic personality traits of target customers can be useful information for companies when designing and implementing marketing communications campaigns. Promotional tactics such as contests might appeal to suburban moms, but be ignored by single, urban professionals. Nevertheless, marketers have found personality to be difficult to apply in marketing strategy. This is primarily due to the lack of metrics for assessing personality traits. Most available measures were originally developed to identify people with mental problems. These have little value or application for consumers who are mentally healthy. As a result, most marketers have turned to lifestyle analysis.
Lifestyle is one of the newer and increasingly important sets of factors being used to understand consumer behavior behind demand. Lifestyle has been generally defined as the attitudes, interests, and opinions of the potential customer. Such variables as interests in hunting, attitudes toward gender equality, and opinions on the importance of stylish clothing can be used to better understand consumer behavior. Lifestyle segmentation is one tool used by brands to connect their value proposition to the needs of particular individuals rather than large, undefined demographics. As a result, companies can tailor communications and promotional offers that target identifiable groups and stimulate their continued demand for products and services.
The promotional activities of an organization continue long after customer acquisition. Incorporating communications tactics that are effective in reminding current customers why they should continue purchasing a brand’s products is just as important as promoting to potential customers. As more brands compete for consumer attention in an increasingly crowded marketplace, organizations must develop marketing communications strategies that address customer challenges, appeal to customer needs, and drive repeat sales.
One method organizations use to show appreciation for existing customers is personalized marketing. This practice had been most useful in online marketing, particularly via websites and email marketing. For example, a website can track a customer’s interests and make suggestions for future purchases. E-commerce sites help customers select and prioritize choices by organizing items based on past online behavior and purchases. Some companies allow for products to be customized using a configuration system.
The emergence of database technology for developing personalized products, ads, and services for specific users with particular profile attributes has helped organizations tailor their offerings for existing customers. Amazon is one company that pioneered the “one-to-one marketing” and personalization tactics that delivered targeted offers and related products to users. Retention strategies that incorporate personalization features may include one or more of the following:
Other marketing communications tactics include discounts, offer redemptions, and point systems. The interactivity between brands and consumers occurs through the offer redemptions recorded by the point-of-sale systems, which can then update each individual shopper’s profile. Personalized marketing can be more accurate when based solely upon individual purchasing records due to the simplified and repetitive nature of retailers such as supermarkets.
Authors such as Don Peppers and Martha Rogers discuss the transition from managing products to managing customers, and differentiating customers rather than just products. This transition allows companies to develop economies of scope rather than economies of scale. To retain their customer base and satisfy customer requirements above those of competitors, brands must engage in the following process:
Implementing these relationship marketing practices helps companies counterbalance new customers and opportunities with current and existing customers to maximize profit. It also counteracts the theory that new customers must be gained at the expense of losing older customers. Many companies in competing markets will redirect or allocate large amounts of resources toward customer retention, particularly in markets with increasing competition. Lead generation activities geared towards attracting new customers may be more expensive than the money and time spent on promotional tactics to retain existing customers. This idea represents a shift from classic marketing theories, which focus on attracting new customers and creating transactions rather than maintaining current customers.
12.3: The Promotion Mix
Advertising communicates a message to a targeted audience and generates feedback in the form of a sale or other action taken by a consumer.
Summarize the different components that comprise an advertising campaign
- Through advertising, a marketer hopes to communicate a message to a targeted consumer group via means including print, electronic (radio and television), the Internet and mobile phones.
- The media plan, developed simultaneously with the creative strategy, schedules how and when consumers see advertisements.
- Effective advertising illustrates the product’s value and gives consumers a reason to take action and/or buy.
- A target audience is defined through information gathered from focus groups, demographics and by understanding how certain consumer groups think.
an attitude or lifestyle advertisers attempt to link to a product.
- Brand Character Statement
sets the tone of an advertisement and defines what the targeted consumer group should do or feel when they are exposed to it.
understanding how a certain group thinks .
- “Hertz vs. Avis,” “Coke vs. Pepsi,” “American Express” vs. MasterCard.”
Advertising – How Marketers Communicate to Consumers
When a company pays to have a message that defines its goods or services delivered or communicated to as many people as possible, they are said to be advertising. Effective advertising illustrates the product’s value and gives consumers a reason to take action and/or buy. There are a variety of ways to promote a product. These methods are collectively referred to as Marketing Communications (MarCom) Matrix, and include direct marketing, public relations/publicity, new media, and advertising.
Through advertising, a marketer hopes to communicate a message to a targeted consumer group via means including print, electronic (radio and television), the Internet and mobile phones. Advertising generates feedback that is analyzed and measured. Good feedback typically translates into money spent on the product while bad feedback prompts the marketing source to reevaluate its marketing plan.
The Anatomy of an Advertising Campaign
Developing a brand character statement sets the tone of the campaign and defines what the targeted consumer group should do or feel when they are exposed to it. The strategy addresses the message that will be communicated while creative tactics dictate how the strategy is actually implemented.
A target group or audience is defined through information gathered from focus groups, demographics and by psycho-graphics, i.e. statistics illustrating how a certain group thinks and ultimately buys.
The product’s pros and cons are identified so that benefits are sold. How the product differs from its competition or its Unique Selling Position (USP) is also established. Facts, statistics, consumer images and scenarios are used to corroborate a campaign’s premise. Terms like “the best,” “new” and “traditional” position the product within the marketplace.
A campaign must fit the image of the marketer to ensure that its public perception remains intact. It must offer a rationale or “reason why” a product is able to deliver on its claim. Its “aperture,” or the proper timing and placement of an ad, can maximize a campaign’s success.
Developing a Media Plan
The media plan is an integral part of the advertising campaign and is developed simultaneously with the creative strategy. The standard media plan has four stages:
- Stating objectives like reach or the number of different persons exposed, frequency of times the consumer is exposed to a message, and timing of media assertions over the course of the campaign.
- Assessing how a particular message and target audience relates to different types of media by analyzing the research findings provided by the media type.
- Implementation of media choices dictated by available budget or media types most likely to deliver the best results. The placement of advertisements along with their size and positioning are based upon data associated with the targeted consumer group.
- The media budget is included in the actual advertising budget.
The Advertising Business and New Media
Advertising is often the only method of communication businesses use to speak to prospective consumers. Advertisements must reflect prevailing ideas by tapping into the social, cultural and moral pressures. Emerging advertising agencies often structure their business model to society’s ever changing ideals. Current technology is forcing advertisers to move away from antiquated structure and practices. The growth of interactivity and open sourcing has placed power in the hands of the consumer, giving them control over what they want to see and when they want to see it.
Mar Com Matrix
The building blocks of successful marketing.
A diagram of the Mar Com Matrix that shows how successful marketing is built from an idea (new media, direct marketing, advertising, public relations and publicity, promotion, and event marketing).
Advertising’s value is based upon how often it is viewed, used or shared. If the message is reaching more people, it is achieving the desired results. New media accelerates the process. No longer is a product limited by the scope and time-frame of a conventional advertising campaign. If an advertisement is interesting, entertaining or helpful, the message goes “viral” via social-networking websites and blogs. The once passive consumer has become a part of the process; an active advertising channel who impacts brands and how a product is perceived.
The key to successful advertising is to sell benefits, not features.
A diagram of the ad ladder that shows values from more consumer based to more product based (values, consumer benefit, product benefit, product feature, and attribute).
12.3.2: Personal Selling
Marketing impacts personal selling and improves the selling environment by increasing exposure to potential customers.
Discuss the different elements of personal selling
- A successful personal seller must utilize aggressive sales tactics that influence and control the process, presenting it as a mutually beneficial, interpersonal exchange of goods or services for equitable value.
- To be successful in personal sales, the salesperson must understand how to sell to the needs of a customer.
- Selling is defined as an interaction whereby an item of value is exchanged for a different item, which is usually money.
This involves finding and identifying buyers who are most likely to buy the product or service.
- Gaining Commitment
This involves closing the deal or making the sale.
- Alternative Close: Which would you prefer: the 36-inch or the 51-inch flat screen TV?
Selling, the art of persuasion, is defined as a one-on-one interaction whereby a tangible or intangible item of value is exchanged for a different item, usually with money in an amount of equal or greater value of the item being sold. Selling is part of the promotional mix. It is systematic, repetitive, and measurable. When properly analyzed, sales data will offer objections to overcome and help to predict sales patterns and projections.
The Marketing Hub describes relationships in the promotional mix.
Understanding Customer Needs
To be successful in personal sales, the salesperson must understand how to sell to the needs of a customer. Psychologist Abraham Maslow created a Hierarchy of Needs that offers useful information for personal selling. Maslow outlined five levels of need and as each level is fulfilled, a person progresses to the next one. At the most basic level, physiological and safety needs must be met with food, clothing, and shelter, so a product that meets these basic needs has potential to sell well. However, the basic human need to consume food and liquids should not be confused with wanting a hamburger and a soft drink.
Mid-level hierarchy needs are social in nature and include self-respect, self-esteem, and the esteem of others. They create a powerful internal motivation and drive demand for status-oriented products. Those selling luxury goods cater to esteem needs. When customers flaunt wealth by buying expensive products it is referred to as conspicuous consumption or luxury badging.
The Mechanics of Personal Selling
Sales capturing is defined as bringing in and closing deals. A successful personal seller must utilize aggressive sales technics that influence and control the process, presenting it as a mutually beneficial, interpersonal exchange of goods or services for equitable value.
At the core of personal selling is the human exchange between buyer and seller. The interaction is based upon fulfilling a need or desire with the product or service that is offered and paid for. A systematic approach to successful personal selling includes good prospecting, the salesperson’s in-depth knowledge of the product, and the qualification of potential buyers. Good prospects are predisposed and well-suited to the product or service being offered, allowing the salesperson to facilitate the exchange of value and to guide them through the process with a minimum amount of objections or resistance.
The personal selling process has eight steps: The first is prospecting, which involves finding and identifying buyers who are most likely to buy the product or service. There are numerous ways to qualify leads: cold calls by telephone, email, through social networking, or personal referrals. The word “cold” refers to fact that the person receiving the call is not expecting it or has not specifically asked to be contacted by a sales person.
Pre-approach is the next step used to prepare for the presentation. It consists of customer research and goal planning. The next step is the approach or initial meeting between the salesperson and the customer. Following the approach is the need assessment step when the customer’s need for the product is evaluated by the salesperson. During this step, questions are asked to identify the current situation, the source and impact of any problems, the benefits of the product as part of the solution, and the buyer’s level of interest.
Once need is established, the salesperson is ready to present or demonstrate the product. This step is designed to grab the buyer’s attention, ignite interest, create desire, and inspire action (AIDA) by showing the product’s advantages and benefits. At this point, customer objections involving price, value, adequacy, the commitment to buy, or other issues are addressed. Successful salespeople anticipate objections and respond to them respectfully before advancing to gaining commitment, which involves closing the deal or making the sale.
Salespeople use different types of methods to close deals such as the alternative close, the assumptive close, the summary close, or the special-offer close. The last and most crucial step in the process is follow up to ensure customer satisfaction and help establish a relationship.
Other sales strategies include direct sales conducted outside of a retail location, guaranteed, needs-based, persuasive, hard, heart, relationship, target account, priced-based, and solution selling.
The Relationship between Sales and Marketing
Marketing impacts personal selling and improves the selling environment by increasing exposure to potential customers. Marketing campaigns seek to drive potential customers towards sales people.
Though quite different in nature, marketing and sales departments handle similar concepts. It is essential for them to maintain a good working relationship based upon clear and concise communication and interaction.
12.3.3: Sales Promotion
Sales Promotion stimulates market demand, product availability and coordinates public selling, advertising and public relations.
Explain how sales promotion is used in the promotional mix
- Sales Promotions – increase the perceived value of a product and are usually offered for a limited amount of time.
- Consumer Sales Promotions – target the end user or the customer such as coupons or point of purchase displays.
- Trade Sales Promotions – target organizational customers such as dealers, distribution channels or sales teams that stimulate immediate sales such as sales incentive contests or dealer wholesale price discounts.
- Retail Sales Promotions – are devised and initiated by in-store management such as “buy one get one free” programs or “kids eat free” nights.
- Promotional Mix – a marketing plan’s seven components consisting of sales promotion, advertising, personal selling, direct marketing, publicity/public relations, corporate image and exhibition.
- Aisle interrupters
product signs that jut into the aisle from the shelf, a point of purchase sales promotion device
dissemination of information about a product, product line, brand, or company
- sales promotion
media and non-media marketing communication employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability
- sales promotion device
A type of offer, in the form of a rebate, coupon or price deal that stimulates product sales or prompts a customer to take action
- loss leader
a sales promotion device that offers a temporary reduction on a popular product’s price to stimulate sales on other products being offered.
The primary objective of a sales promotion, a catch all marketing function, is to stimulate market demand, improve product availability and to coordinate public selling, advertising and public relations. A successful sales promotion is meant to prompt a targeted consumer group to show interest in the product or service, try it or ideally buy it. They are delivered to targeted groups via media and non-media marketing communications during a pre-determined, limited amount of time. It is a component of a marketing plan’s “promotional mix” that usually includes advertising, personal selling, direct marketing, publicity/public relations, corporate image and exhibition. Sales promotion cannot compensate for a poor product, a declining sales trend, ineffective advertising or can it create strong brand loyalty.
There are two types of sales promotions; consumer and trade. A consumer sales promotion targets the customer while a trade sales promotion focuses on organizational customers that can stimulate immediate sales.
Contests, coupons, giveaways, loss leaders, point of purchase displays, premiums, prizes, product samples and rebates are sales promotion devices. They are delivered via mixed forms of media such as print, digital, electronic (radio and television) and online in various forms of new media.
Sales Promotions Have Purpose
Sales promotions launch new products, especially ones with perceived high risk, they create repeat customer purchase patterns, move large amounts of products quickly, counter the strategy of a competitor and can move marginal customers to make a choice.
Consumer Sales Promotion Techniques
Consumers attract the greatest number of sales promotion devices. Commonplace techniques include price deals that offer a temporary price reduction while cents-off deals offer a brand at a lower price, usual as a percentage marked on the package. Price pack deals offer a certain percentage more of the product for the same price while a loss leader offers a temporary reduction on a popular product’s price in to stimulate sales for other products offered. Reward programs involve collecting points, miles, or credits from purchases and then redeeming them for rewards. The purchase of a product can also enter a buyer in a contests, sweepstakes, or online games.
One of the most common sales promotion techniques involves coupons. They are used to lower prices, for discounts, free goods and value added giveaways. They are dispensed as neckers placed around the ‘neck’ of a bottle, on-shelf meaning available where product is displayed, as a free-standing insert (FSI) or booklet that is delivered inside the local newspaper, at checkout, on-line, and displayed and shown on mobile phones for redemption. Now, by tweeting or posting sale promotions, the circle of communication is wider than ever. Even “cashback” or rebate offers can be redeemed on line instead of through the mail.
Point-of-sale displays are in-store sales promotion techniques. Aisle interrupters or signs jut into the aisle from the shelf, hanging signs called danglers sway with consumer traffic, product dump bins stimulate curiosity, glorifiers elevate products for better visibility, wobblersigns draw attention and lipstickboards convey product information written in crayon.
Other in-store sales promotions include pull-out fact sheets, special lighting and animated displays powered by solar energy and policy promotions such as “ladies nights” or “kids eat free” offers.
Trade Sales Promotion Techniques
Wholesalers, retailers and other organizational groups are offered a wide array of sales promotion devices such as trade allowances or short term incentives to encourage retailer to stock up on a product, dealer loaders incentivizing product purchase and display, trade contests for selling the most product, point-of-purchase displays to create impulse buying and spiffs or bonus commissions on certain products and trade or functional discounts paid to distribution channel members for conducting sales and special events.
Sales Promotion Techniques at the Retail
Retailer sales promotion devices are regularly rolled out for new marketing initiatives. For example “buy one, get one free, three for two, buy quantity and receive a lower price or percentage discounts on specific days of the week.
Co-promotional sales, or price deals, involve two different products.
A sales promotion flier for a deal between Days Inn and American Express.
Mail-in or online rebates offer give money back to customers on products or services.
A sales promotion flier that highlights product rebates.
12.3.4: Public Relations
Public relations is the management of a message between an individual or organization and the public.
Describe the different aspects of public relations and its primary functions within the promotional mix
- Public relations is communicated through the media in the form of publicity events, speaking opportunities, press releases including video and audio news releases, newsletters, blogs, social media, press kits, and outbound communication to members of the press.
- The ideal end result of public relations is for the information to serve both the source and the public interest.
- All audiences or publics are stakeholders, groups or individuals that can affect or be affected by the actions of the business as a whole, but not all stakeholders are audiences.
includes people who look, think, and act the same as well as those who do not.
to construct a consistent and specific story around a P.R. event or project.
an effect that colors the truth by selectively presenting facts that support a desired position and can sway public opinion.
Public relations is the management of a message between an individual or organization and the public that can be contracted on an hourly, monthly, annual, or “in-house” fee basis. Its primary purpose is to persuade stakeholders to adopt a certain point of view about a project or product. Simply put, public relations manages communication between an organization and the public. It is communicated through the media in the form of publicity events, speaking opportunities, press releases including video and audio news releases, newsletters, blogs, social media, press kits, and outbound communication to members of the press. The media is not paid to publish the information.
There are four core elements to public relations:
- Retain and create goodwill
- First do good, then take credit for it
- Identify and effectively communicate varying points of view and needs to well-defined targets
- It is a planned activity
Who Is the Public?
The public is defined as the totality of a group. The public includes people who look, think, and act the same as well as those who do not. When planning a public relations campaign the marketer should consider who would be most and least likely to interact with the message and what the dialogue would sound like.
What Public Relations Can Do
The response to public relations activities should lend itself to analysis and trending, to predict consequences, to guide executive decisions, and used to trigger planned programs of action. The ideal end results of public relations is for the information to serve both the source and the public interest.
Modern Public Relations
The delivery of public relations messages is shifting from traditional media channels to online media such as social media releases, search engine optimization, content publishing, blogs, microblogs, podcasts, and video. Social media has increased the speed of breaking news and created greater time constraints on response times to current events.
An asymmetrical public relations model allows feedback to flow from the public back to the originating organization, using it as an attempt to persuade the public to change. A symmetrical public relations model means that the organization takes the interests of the public into careful consideration, seeking a balance between the interest of the organization and the public.
The world is in a constant state of change. Communication with an internal as well as external public is essential and has become commonplace with the explosion of one-to-one communication through new technology. Good and bad news travels fast and information goes “viral” with the click of a mouse or tap of a screen.
Bernays, known as the “Father of Public Relations,” managed public relations for World War I.
Effective Public Relations
Depending on the message, some public relations must harmonize with state laws and be reviewed by an attorney to ensure compliance. It must follow a plan of action and aim at goals that are clearly defined. It must be clear to be useful. Its administrators must understand their role and responsibilities. It should build strong relationships and partnerships. Its effectiveness should be measurable with established benchmarks to make sure that the program has achieved the desired goal or objective.
The public relations program’s target audience must be identified so that the message can be tailored to suit them. Sometimes the interests of differing audiences necessitate the creation of several distinct but complementary messages. All audiences or publics are stakeholders, groups or individuals that can affect or be affected by the actions of the business as a whole, but not all stakeholders are audiences.
Messaging constructs a consistent and specific story around a P.R. event or project. It eliminates contradictory or confusing information that will instill doubt in a purchasing choice or other decisions that have an impact on the marketer. Brands aim to have the same problem statement, industry viewpoint, or brand perception shared across sources and mediums.
Spin polishes and colors the truth by selectively presenting facts that support a desired position and can sway public opinion. It is sometimes seen as a derogatory but is commonly used in public relations campaigns.
Negative public relations, also called dark public relations (DPR), is a process of destroying or discrediting. Dirty secrets, misleading facts, or legitimate claims figure heavily into the equation. Its use can be moral and ethical when the information protects or informs the public of danger.
Business Disciplines and Public Relations
- Financial public relations – communicating financial results and business strategy
- Consumer/lifestyle public relations – gaining publicity for a particular product or service
- Crisis Communications – responding in a crisis
- Internal Communications – communicating within the company itself
- Government Relations – engaging government departments to influence public policy
12.3.5: Social Media
Social media as a marketing tool is versatile, far-reaching, fast, inexpensive, fosters brand awareness, and can improve customer service.
Illustrate how social media can be used in the promotional mix
- As a marketing tool, social media is distinct from industrial or traditional media and is versatile, far-reaching, fast , relatively inexpensive, and fosters brand awareness and improves customer service.
- Social media used as a marketing tool provides useful and valuable measurable data on trends, consumer interaction, feedback, public opinion, brand activity, and customer buying habits.
- The Internet has overtaken television as the largest advertising market of all as banner and pop-up ads showcase a vast array of products and services.
Means that both customers and stakeholders are participants rather than passive viewers.
- Social Bookmarking
Enables users to add, annotate, edit, and share bookmarked Web documents for future use.
Are clickable and bring traffic back to a company’s website.
Social media enables individuals and communities to co-create, share, and modify content in an interactive, Internet-based environment. Social media marketing refers to the process of gaining website traffic through social networking sites. It is driven by word of mouth. Results come from earned, as opposed to paid media. As a marketing tool, social media is distinct from industrial or traditional media, is versatile, far-reaching, fast, relatively inexpensive, fosters brand awareness, and improves customer service.
Different Types of Social Media
Limited only by the imaginations of Internet Web designers, social media offers marketing vehicles, such as magazines, forums or discussion sites, weblogs, social blogs, microblogs, instant messaging, email, crowdsourcing distributed to a specific group of people, photographs or pictures, articles, video, and wikis or collaborated websites allowing additions, modifications, and deletions. Others include social networks, subscribed episodic audio, video, PDF or ePub podcasts downloaded or streamed, online telephonic services, and social bookmarking services that enable users to add, annotate, edit, and share bookmarked Web documents for future use and more.
Social Media Functionality
There are six ways social media functions: a). collaborative–Wikipedia, blogs, and microblogs, such as Twitter; b) content communities (e.g.,YouTube); c) social networking sites (e.g., Facebook); d) virtual game worlds (e.g.,World of Warcraft; e) virtual social worlds (e.g.,Second Life); and f. voice-over IP or online telephone services. All can be consolidated into one profile via aggregation platforms. All can be woven into a marketing plan rich with sales promotions, public relations outlets, advertising, and other elements of the “promotional mix.”
Mobile social media on a wide array of devices, such as tablets, iPods, phones, and other new products, extend and expedite marketing reach.
Search Engine and Keyword Optimization
Search engine ranking, content quality, or the relevancy to search terms, backlinks and links have emerged as effective social media marketing tools.
Backlinks are clickable and bring traffic back to a company’s website. They impact ranking within the search results if positioned properly. In addition, the anchor text used within a link, where it appears on a page and the other content on the page dictates its effectiveness.
The words used in website copy give exposure if they match common search words used in queries. A good social media marketer researches the correct words that people type into search engines so it behooves a business to embed those words in their websites. If a narrower focus is used when selecting keywords, competition within the search results drops dramatically so research using search phrase competition results, and search volume is the foundation of successful Internet marketing.
Strategic and Focused
Social media used as a marketing tool provides useful and valuable measureable data on trends, consumer interaction, feedback, public opinion, brand activity, and customer buying habits. Its reach is precise and easily aimed at a targeted audience. Automated information technologies, that are indigenous to social media platforms, optimize the production of goods and the delivery of services.
In the context of social media, “engagement” means that both customers and stakeholders are participants rather than passive viewers. Each participating customer becomes part of the marketing process, as other customers read comments or reviews.
Social Media Impacts Traditional Advertising
The Internet has overtaken television as the largest advertising market, as banner and pop-up ads showcase a vast array of products and services. QR codes, facilitated by mobile social media, online and in tandem with print advertising deliver extensive product and service information with a simple scan of a cell phone.
Social Media Technology
Social media platforms continue to grow at an astounding rate.
Internet and social media leaks frequently impact traditional advertising as ads often appear online earlier than they are scheduled to premiere and go viral. They are seen more quickly and by more users without the time delays of traditional advertising methods.
Blogging gets a product to the public within minutes and without any technical, production, or print requirements. Most Web space hosts provide a free blogging platform, such as WordPress, for customer use. They are picked up by search engines, are indexed quickly, are interactive, and allow for online dialogue. Blogs are automatically updated with each post and are accessed through a feed. Functionality is expandable through a wide array of plugins.
Social Media and Confidential Information
The speed at which information spreads on the Internet has a downside. In 2010, the top three incidents faced by organizations involved sharing too much information in public forums, loss or exposure of confidential information, and an increased exposure to litigation. Legal damage is capable of devastating a business.
12.3.6: Direct Marketing
Direct marketing goes direct to customers via telephone, mail, fax, TV, radio, online, magazines, newspapers or face-to-face.
Distinguish direct marketing tactics from mass marketing tactics
- Direct marketing targets individual members of defined consumer groups.
- The message is based upon a clear “call to action” delivered directly to predisposed consumers.
- Direct marketing provides valuable and reliable consumer and sales data, as well as clear, quantifiable success metrics for analysis.
- community campaign
the use of flyers and brochures that are delivered to homes.
- QR Code
a quick response bar code scanned via mobile phone
- An advertisement calling consumers to action: “Just dial 800- 888-8888, place your order and receive your bonus gift! “
Direct marketing allows businesses and nonprofit organizations to advertise and market directly to customers via a variety of print and electronic mediums. Direct marketing campaigns focus on the consumer, statistical data generated via outreach and the accountability of the marketer. The message is based upon a “call to action” delivered directly to predisposed consumers.
Direct Marketing Popularity
In 2010, direct marketing accounted for 8.3% of the total U.S. gross domestic product. The industry employs approximately 1.4 million people directly and another 8.4 million in related jobs and businesses. Commercial and nonprofit businesses spent approximately $150 billion on marketing, accounting for more than half of all U.S. advertising expenditures for the year.
Characteristics of Direct Marketing
Direct marketing targets individual members of defined consumer groups. It distinguishes itself from mass marketing by virtue of the distance between the manufacturer and the ultimate end user, seeking to deliver a specific “call to action” to consumers. Reduced mail cost and the elimination of “brick and mortar” retail stores have helped to decrease the cost of direct marketing campaigns. The practice also attempts to establish a personal relationship with the customer because of direct purchases and customer service on a “first name” basis. Direct marketing has cleared the way for a number of competitors to enter markets on a global level and has increased product offerings to fill niche markets.
Toll-free 1-800 numbers, loyalty marketing programs, magazine subscription cards, mail order catalogues, and credit card rewards programs laid the foundation for direct marketing’s success. In addition, improvements in traditional delivery techniques and the introduction of new technologies have accelerated this growth. Customers can now buy products without contact from a salesperson. Product information is delivered directly and impersonally. Questions can be answered through toll-free numbers, FAQ pages on websites or via email.
Types of Direct Marketing Tools
There are many different direct marketing tools, including direct mail, telemarketing, couponing, direct response TV and radio, face-to-face selling, community campaigns, and grassroots campaigns.
The Internet provides extraordinary reach. Marketers can use email, along with interactive static banner ads, pop ups, video and floating unit ads. Browser cookie analysis tag special interests and push appropriate products or services on personal websites. Marketers use search engine optimization and pay for prominent placement on query result lists to bring their products to a customer’s attention. Social media reaches out to targeted consumer groups and showcases compatible goods and services.
Mobile technology direct marketing includes SMS-short message service, MMS-multi-media message service, QR Codes, applications, push notifications sent directly to users, and location based messages.
The Benefits and Shortcomings of Direct Marketing Techniques
Direct marketing response is track-able and measurable regardless of the delivery medium. It provides valuable and reliable consumer and sales data, as well as clear, quantifiable success metrics for analysis.
Direct marketing places control in the hands of the consumer, making a poorly written message strategy or improperly compiled demographic database problematic. “Opt-out” lists, variable message printing and well defined demographics help to counteract these problems.
Companies can engage in marketing outreach through direct marketing. A mailed letter is an example of direct marketing.
12.4: Selecting the Promotion Mix for a Particular Product
12.4.1: Promotional Objectives
There are three main promotional objectives: inform the market, increase demand, and differentiate a product.
Explain the objectives and characteristics of a promotion mix
- Increase demand: These strategies are used during the product life cycle in order to increase sales.
- Present information about the product: In order for customers and consumers to want the product they need to understand what the product is.
- Differentiate a product: This is especially important if there are multiple competitors in the same market.
- marketing mix
A business tool used in marketing products; often crucial when determining a product or brand’s unique selling point. Often synonymous with the four Ps: price, product, promotion, and place.
- product life cycle
The process wherein a product is introduced to a market, grows in popularity, and is then removed as demand drops gradually to zero.
To show, or be the distinction between two things.
The promotion mix is an element of the marketing mix. It includes advertising, public relations, personal sales, and sales promotion. Mediums used for promotion include: the Internet, television, advertisements, special events, endorsements, newspapers, and magazines. Different approaches are needed for each medium in order to be successful.
The marketing mix includes product, promotion, price, and place.
There are three main objectives of a promotional mix:
- Increase demand: These strategies are used during the product life cycle in order to increase sales. Eventually a product will reach its saturation point, at which time investing in sales will decrease as the company focuses its attention on a new product.
- Present information about the product: In order for customers and consumers to want the product they need to understand what the product is and how it benefits them. Information about the product will differ depending on the specific target market.
- Differentiate a product: This is especially important if there are multiple competitors in the same market. For example, Apple was able to differentiate itself in the computer industry. For many years it was the preferred computer for those who had advanced computing skills. Then Apple did an advertising campaign to show general users how easy it is to use. This took advantage of the complaints the market had over Windows operating software, which came standard with most PCs.
In order for a market to accept a new product they need to know how it address their pain point. Information about the product should address the “what’s in it for me” aspect that is inherent in human nature.
12.4.2: Stages in the Product Life Cycle
There are four stages in the product life cycle: introduction, growth, maturity, and decline.
Examine the various stages of the product lifecycle
- The introduction stage of the product life cycle is where a new product is launched into a market.
- In the growth stage of the product life cycle, the market has accepted the product and sales begin to increase.
- In the maturity stage of the product life cycle, sales will reach their peak.
- In the decline stage of the product life cycle, sales will begin to decline as the product reaches its saturation point.
- There is no set schedule for the stages of a product life cycle.
- product life cycle
The process wherein a product is introduced to a market, grows in popularity, and is then removed as demand drops gradually to zero.
Stages in the Product Lifecycle
There are four stages in the product life cycle: introduction, growth, maturity, and decline .
Firms’ products progress through the stages of development, which is indicated by their changing profits over time.
A chart that shows a product’s life cycle based on sales and time on the market (introduction, growth, maturity, and decline).
After all research and development has be done it is time to launch the product and begin its lifecycle. The introduction stage of the product life cycle is when the marketing team emphasizes promotion and the product’s initial distribution. Often the product will have little or no competitors at this point. Nonetheless, sales may remain low because it takes time for the market to accept the new product. At this stage of the life cycle, the company usually loses money on the product.
In the growth stage of the product life cycle, the market has accepted the product and sales begin to increase. The company may want to make improvements to the product to stay competitive. At this point, there are still relatively few competitors.
In the maturity stage of the product life cycle, sales will reach their peak. Other competitors enter the market with alternative solutions, making competition in the market fierce. The company that introduced the new product may begin to find it difficult to compete in the market.
In the decline stage of the product life cycle, sales will begin to decline as the product reaches its saturation point. Most products are phased out of the market at this point due to the decrease in sales and because of competitive pressure. The market will see the product as old and no longer in demand.
There is no set schedule for the stages of a product life cycle. Differences will occur depending on the type of product, how well it is received by the market, the promotional mix of the company, and the aggressiveness of the competition.
12.4.3: Target Market Characteristics
The different characteristics of a target market are geographic, demographic, psychographic, behavioral, and product related.
Differentiate between different target market characteristics
- A geographic target market can be consumers in a city, state, or country.
- A demographic or socioeconomic target market would focus on a specific gender, age group, income level, or education level.
- A psychographic target market would be a market that has similar attitudes, values, or lifestyle.
- The behavioral target market focuses on occasions and degree of loyalty.
- Product-related segmentation describes a target approach for customers who already own a specific product.
- Determining a target market approach to sales has many benefits. It can create a more specific marketing campaign, increase sales, and decrease the number of competitors in the market.
- target market
a group of people whose needs and preferences match the product range of a company and to whom those products are marketed
Target Market Characteristics:
The different characteristics of a target market are geographic, demographic, psychographic, behavioral, and product related.
A geographic target market can be consumers in a city, state, or country. This is often important when it comes to international advertising. Some products may do well in some countries but not in others. For example, in Japan where they don’t have ovens, companies such as Betty Crocker would not focus their products in this geographic target market.
A geographic target market could be a city, state, or country.
A picture of a street in the United Kingdom.
A demographic or socioeconomic target market would focus on a specific gender, age group, income level, or education level. For example, Plato’s Closet, a consignment store for young adult clothing, would focus on the teen and young adult demographic. Irish Spring would focus on a male demographic.
A psychographic target market would be a market that has similar attitudes, values, or lifestyle. For example, the televisions station G4 is aimed at men but also gamers in the age 16-34 demographic.
The behavioral target market focuses on occasions and degree of loyalty. Facebook marketing is often focused on loyal customers with specials they can claim by getting a code on Facebook. There are also discount cards available that offer discounts by allowing shoppers to collect points each time they shop at their store.
Product Related Segmentation
Product related segmentation describes a target approach for customers who already own a specific product. For example, accessories for people who own cell phones, tablets, computers, iphones, or gaming systems. Determining a target market approach to sales has many benefits. It can create a more specific marketing campaign, increase sales, and decrease the number of competitors in the market.
12.4.4: Characteristics of the Product
The unique characteristics of a product should be used as inputs in determining the product’s marketing mix.
Examine how the characteristics of a product impacts the selection of a promotional mix
- The characteristics of the product are the features that differentiate it from other products on the market.
- When companies create a product they have specific features in mind. It can be characteristics that improve on an existing product or ones that fill a currently unfilled need. Promoting these features can be a successful approach.
- Characteristics of a product also help to determine the price of a product. Premium features may be able to fetch a premium price.
- It is the combination of demand for a product and its price that help to determine the marketing mix.
- price index
A statistical estimate of the price level of some class of goods or services.
- target market
a group of people whose needs and preferences match the product range of a company and to whom those products are marketed
- marketing mix
A business tool used in marketing products; often crucial when determining a product or brand’s unique selling point. Often synonymous with the four Ps: price, product, promotion, and place.
Characteristics of the Product
The characteristics of the product are the features and elements that differentiate it from other products on the market. Product characteristics help determine the marketing mix, potential target market and the pricing of a product.
A product’s characteristics determine its target market and price.
A display of Dewar’s Scottish whiskey.
A product needs to differentiate itself in the market and carry distinct characteristics that separate it from its competitors. Otherwise, there would be no reason for consumers to purchase that product over any other product on the market.
Determining the Marketing Mix
When companies create a product they have specific features in mind. It can be characteristics that improve on an existing product in the market or ones that help with a currently unfilled need. Companies spend a lot of time and money on product research to understand the needs of the market and how their product can fill that need.
Characteristics of a product also help to determine the price of a product. Some high end features will increase the price of the product, while low-end features could decrease the price of the product. This can determine where a product may fall on the price index. It is the combination of demand for a product and its price that help determine the marketing mix.
Different strategies are used for high end, expensive products than are used for low end, less expensive products. In addition, different marketing strategies are used depending on the target market. Some consumers need an Internet marketing approach, while other consumers may be more receptive to television or magazine ads. All of these questions can be answered by understanding the characteristics of the product.
12.4.5: Types of Buying Decisions
Different types of buying decisions can involve logical, impulsive, and emotional motivations.
Distinguish between a consumer and business buying decision
- Buying decisions are based on buying behavior. Consumer behavior and business behavior can differ because their buying processes are different.
- Consumers will often buy on emotion or impulse whereas businesses will buy based on need.
- The type of buying decision impacts the marketing mix and the promotional mix for a product. It will also affect the product life cycle.
- Sometimes the type of product will make a difference in the buying decision. For consumers, large ticket items, such as an appliance, a car, or a home, aren’t impulse items.
- A company needs to know about the features of a product and how it will help fill a specific need. Businesses are also worried about price and return on investment.
- buyer behavior
the process used to decide whether to purchase a product
Type of Buying Decisions
Different types of buying decisions can include logical, impulsive, and emotional motivations. Buying decisions are based on buyer behavior. Consumer behavior and business behavior can differ because their buying processes are different. Consumers will often buy on emotion or impulse whereas businesses will buy based on need. The type of buying decision impacts the marketing mix and the promotional mix for a product. It will also affect the product life cycle.
Because consumers often buy on emotion, ads can affect the buying decision. Consumer products are often advertised on television in a way that tries to create an emotional tie with the buyer. An example of this are the alcohol ads with beautiful women and people having a good time, or car ads that stir emotions of envy for racing the streets like a race car driver.
Buyer behavior shapes buying decisions.
Emotional tactics don’t work well with businesses. A company needs to know about the features of a product and how it will help fill a specific need. Businesses are also worried about price and return on investment.
Sometimes the type of product will make a difference in the buying decision. For consumers, large ticket items, or such as an appliance, a car, or a home, aren’t impulse items. Most people can’t afford to buy a new car when they want one, they need to wait until their current car needs to be replaced. This is why companies can influence what type of car a person will buy, but not when they will buy one.
12.4.6: Funds Available Relative to Costs
Marketing departments need to look at what types of advertising are available that will keep them within budget.
Review how and why funds are allocated and available relative to costs
- Each type of advertising is sold at a different rate and a company has a limited budget in which to promote a product.
- To determine the best type of promotional strategy, a company should look at its target market. Consumers in each type of market will have a preferred form of advertising.
- Other factors that affect the funds available for product promotion include the budget for the overall product launch and the expected length of the introduction phase.
An itemized summary of intended expenditure, usually coupled with expected revenue.
Funds Available Relative to Costs
No company has an unlimited promotional budget. Marketing departments need to look at what types of advertising are available that will keep them within budget.
Different Types Of Advertising
There are different types of advertising available. They include Internet marketing, television ads, radio ads, special events, magazine and newspaper ads, billboards, and endorsements. Each type of advertising is sold at a different rate and a company has a limited budget in which to promote a product .
Different forms of advertising charge different rates and can impact the promotional mix budget.
Determining the Promotion Strategy
To determine the best type of promotional strategy, a company should look at its target market. Consumers in each type of market will have a preferred form of advertising. Companies should determine which forms of promotion will reach the most consumers in a specific target market. This strategy will help marketing departments efficiently use their promotional budget.
Other Factors That Can Affect Funds
There are other factors that can affect the funds available for a promotional mix. When a company is looking at launching a new product, they need to consider research, development, production, and marketing. A company may focus more on the research and development of a product, which will affect the amount of money that is available for marketing and production.
Another factor that will affect funds for promotional strategies will be the estimated cost of the product launch. When a product enters the market, it will most likely lose money until it is accepted by consumers. If a product is estimated to have a long introductory phase, it will affect the promotional strategy and the funds that are available for advertising.
12.4.7: Push and Pull Strategies
Push and pull strategies are promotional strategies used to get the product to its target market.
Differentiate between push and pull strategies as part of a product’s promotional mix
- A push strategy places the product in front of the customer to make sure the consumer is aware of the existence of the product. This can work well when manufacturers have an established relationship with customers or when the product is an impulse purchase-type item.
- Push strategies include trade shows, showrooms, getting retailers to stock a product, and creating a supply chain to facilitate distribution.
- A pull strategy motivates customers to actively seek out a specific product and it best for new products or in the case when a manufacturer has a strong and visible brand.
- Pull strategies include mass media advertising, referrals, customer relationship management, and sales promotions.
- Companies usually use a combination of push and pull strategies in a marketing mix.
- pull strategy
communication not demanded by the buyer
- push strategy
communication demanded by the buyer
- customer relationship management
Customer Relations Management (CRM) is concerned with (among other things) the conversion rate: percentage of customers who “try and buy” the product.
Push and Pull Strategies
Push and pull strategies are promotional strategies used to get the product to its target market.
A push strategy places the product in front of the customer, via a form of advertisement, to make sure the consumer is aware of the existence of the product. This type of strategy works well for low value items and impulse buy items . The different ways a company can use a push strategy to increase awareness of a product include:
Push and Pull Strategies
Push and pull strategies are used to get a product to the target market.
A diagram that shows the push-pull strategy: 1.) technology push – research and development, production, marketing, and need; 2.) market pull – research and development, production, marketing, and expressed marketing need.
- At trade shows and showrooms, businesses can demonstrate the product’s features to potential customers.
- Companies can encourage retailers to stock a product. Sometimes a company has to negotiate with a retailer to stock a specific item because retailers have limited store space and need to stock items they know will sell.
- Companies can create a supply chain so that retailers can obtain the product in sufficient quantities.
Push strategies work best for merchants that already have an established relationship with users. For example, cell phone providers proactively send (i.e. push) advertisements via text or MMS messages to mobile customers regarding promotions and upgrades. This permission-based marketing can be effective if personalized for the user based on personalized preferences, usage and buying behavior. However, push strategies are also effective for building demand for high-priced services (e.g., enterprise software) that are targeted to specific markets.
A pull strategy stimulates demand and motivates customers to actively seek out a specific product. It is aimed primarily at the end users. A strong and visible brand is needed to ensure the success of a pull strategy. The different ways a company can use a pull strategy to promote a brand include:
- Advertising strategies that include mass media promotion of a product
- Customer relationship management that makes existing customers aware of new products that will fill a specific need
- Sales promotions and discounts
Using these strategies will create a demand for the product. With that demand, retailers will be encouraged to seek out the product and stock it on their shelves. For instance, Apple successfully uses pull strategies to launch iPhones or iPads. Likewise, music has also fallen under pull strategies due to digitization and the emergence of social networking websites. Music platforms such as iTunes, Grooveshark and Spotify are reflective of the power shift from providers to consumers. Merchants must adapt their strategies to pull in demand, rather than push products–in this case, music–to consumers.
Most businesses will use a combination of push and pull strategies in order to successfully market a product.
12.4.8: Trade vs. Consumer Promotions
Trade promotions are targeted toward retailers while consumer promotions are targeted toward consumers.
Differentiate between trade and consumer promotions relative to a product’s marketing mix
- The purpose of trade promotions is to help companies differentiate a product, increase product visibility, and increase the product purchase rate.
- The purpose of consumer promotions is to increase brand awareness and market acceptance.
- There are various types of trade and consumer promotions.
- Consumer promotion activities include rebates, coupons, premiums, contests, kids eat free programs,reward programs, and free samples.
- brand awareness
Brand awareness is the extent to which a brand is recognized by potential customers and is correctly associated with a particular product.
- Federal Trade Commission
an independent agency of the United States government that seeks to promote consumer protection and the eliminate and prevent anti-competitive business practices, such as coercive monopoly
Those engaged in an industry or group of related industries.
To show, or be the distinction between two things.
Trade versus Consumer Promotions
Trade promotions are targeted toward retailers while consumer promotions are targeted toward consumers.
A point of purchase or end cap display can make consumers aware of new products.
Trade promotions are marketing activities executed between manufacturers and retailers. Trade promotions help companies differentiate a product, increase product visibility, and increase the product purchase rate. But while there are multiple products on the market, retailers only have a finite space to display items on their shelves. It is therefore sometimes necessary to encourage retailers to stock your item instead of your competitor’s item.
To this point, trade promotions include:
- Trade allowances are incentives used to encourage a retailer to stock a product such as cash discounts or promotional incentives.
- Dealer loaders are incentives given to a dealer to display a product, such as in-store displays, premiums, or rebates.
- Trade contests are used to encourage retailers to sell products, as the retailer who sells the most wins a prize.
- Point of purchase display (POP) is an end cap or center store display where retailers can show the products to customers to increase awareness.
- Training programs teach employees or retailers the benefits and uses of a product.
- Push money is an extra commission paid to encourage the stocking and selling of a product.
Consumer promotions are marketing activities targeted at the consumer to encourage them to buy the product. These are often used at the product launch to increase brand awareness, market acceptance, and sales. Types of consumer promotions can include:
- Price deals are temporary reductions in price, such as 50% off an item.
- Discounts are reductions to a basic price of goods or services.
- Reward programs allow consumers to collect points, miles, or credits for purchases, which they can later redeem for rewards.
- Coupons have become a standard mechanism for sales promotions.
- With rebates, consumers are offered money back if the receipt and barcode are mailed to the producer.
- Some contests or sweepstakes automatically enter the consumer into the event through the purchase of the product.
- Free samples are when a product is given to the consumer so that he or she may try a product before committing to a purchase.
- Discounts are sometimes given to customers who buy in large quantities.
- Kids eat free promotions offer a discount on the total dining bill by offering one free kid’s meal with each regular meal purchased.
- Premiums are promotional items that can be received for a small fee when redeeming the proof of purchase.
Companies will often use a combination of trade and consumer promotions when launching a new product.
12.5: Integrated Marketing Communications
12.5.1: Setting Goals
The ultimate goal of IMC is to unite all aspects of marketing communications so they work together seamlessly and harmoniously.
State the most common goals of integrated marketing communications campaigns
- Integrated Marketing Communication (IMC) is an approach to brand communications where the different modes work together to create a seamless experience for the customer and are presented with a similar tone and style that reinforces the brand’s core message.
- Some of the most common goals of IMC campaigns include increasing brand awareness, generating sales and reinforcing repeat purchases.
- Only changes in the marketplace, new competitive forces, or new promotional opportunities should cause companies to alter strategies and reassess IMC goals.
The act of fragmenting or something fragmented; disintegration.
composed and coordinated to form a whole
Integrated Marketing Communication (IMC) is an approach to brand communications where the different modes work together to create a seamless experience for the customer. Customers are presented with a similar tone and style that reinforce the brand’s core message. The ultimate goal is to make all aspects of marketing communication–advertising, sales promotion, public relations, direct marketing, personal selling, online communications and social media–work together as a unified force, rather than in isolation. This synergy between different marketing elements maximizes their cost effectiveness .
Integrated marketing communications can be used to develop brand awareness, increase consumer demand and change beliefs towards a product.
The cost effectiveness of mass media due to fragmentation has forced integrated marketing communications to the forefront of modern marketing. As consumers spend more time online and on mobile devices, the goal for marketing teams should be for all exposures of the brand to tie together so they are more likely to be remembered. Increasingly the strategies of brands cannot be understood by looking solely at their advertising. Instead they can be understood by seeing how all aspects of their communications ecosystem work together and in particular how communications are personalized for each customer and react in real time.
Common IMC Objectives
In addition to considering recent market, consumer and technological shifts, brands must assess their marketing budget and target audience when setting IMC goals. An IMC strategy with a budget of $2 million will be radically different in size, scope and reach than a marketing budget of only $2,000. Thus, smaller businesses with tiny IMC budgets may rely heavily on social media advertising and word-of-mouth networks to increase brand presence and generate new leads, rather than more expensive television and billboard advertising.
Despite varying budgets, product features and benefits, and consumer behaviors, organizations typically set and work towards the following goals when implementing IMC strategies:
- To develop brand awareness
- To increase consumer or business demand for a product category
- To change or influence customer beliefs or attitudes
- To enhance purchase actions
- To encourage repeat purchases
- To build customer traffic to physical stores, websites or other marketing channels
- To enhance firm/brand image
- To increase market share
- To increase sales
- To reinforce purchase decisions
IMC strategies may seek to achieve one, many or all of these objectives throughout the course of a campaign. Once strategies have been implemented, they are not changed unless major new events occur. Only changes in the marketplace, new competitive forces, or new promotional opportunities should cause companies to alter strategies and reassess IMC goals.
12.5.2: Determining a Budget
Marketing budgets aid in the planning of operations by forcing managers to prioritize activities and consider how conditions may change.
Explain how the components of IMC influence the allocation of funds for a marketing budget
- Budgeting also helps coordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments.
- Two big budgeting decisions should be resolved up front: how shall marketing efforts be funded, and who will benefit from the new program?
- Components of IMC include: the foundation, the corporate culture, the brand focus, consumer experience, communications tools, promotional tools, and integration tools.
A name, symbol, logo, or other item used to distinguish a product, a service, or its provider.
Determining a Budget
As with all business activities, marketing budgets help the planning of actual operations by forcing managers to prioritize activities and consider how conditions might change. Marketing also encourages managers to take steps now, so they can deal with problems before they arise. It also helps coordinate the activities of the organization by compelling managers to examine relationships between their own operation and those of other departments, which is a key component of integrated marketing. The essential purposes of budgeting include:
- To control resources
- To communicate plans to various responsibility center managers
- To motivate managers to strive to achieve budget goals
- To evaluate the performance of managers
- To provide visibility into the company’s performance
Marketing plans are resource driven and they affect the budget. Therefore, two big budgeting decisions should be resolved up front:
- How shall these efforts be funded? For example, 70% will be reallocated through cost reductions by consolidating programs and 30% will come from new funding.
- Who will benefit from the new program? For example, 70% will advance the reputation of the company and 30% will build “steeples” – the critical core themes that make a difference, which are usually only built one at a time.
Integrated Marketing Communication Components
When determining a budget for an integrated marketing plan, it is important for managers to understand the components of IMC in order to allocate funds properly. These include:
Integrated Marketing Budgets
When budgeting a marketing plan, it is important to allocate funds appropriately to the different facets of integrated marketing.
A diagram that shows two facets of integrated marketing for a website as well as the audiences that are reached – email (your friends) and outreach (potential new friends).
- The foundation – This component is based on a strategic understanding of the product and market. This includes changes in technology, buyer attitudes, and behavior, as well as anticipated moves by competitors.
- The corporate culture – Increasingly brands are seen as indivisible from the vision, capabilities, personality, and culture of the corporation.
- The brand focus – This is the logo, corporate identity, tagline, style, and core message of the brand.
- Consumer experience – This includes the design of the product and its packaging, the product experience (for instance in a retail store), and service.
- Communications tools – This includes all modes of advertising, direct marketing, and online communications including social media.
- Promotional tools – This includes trade promotions; consumer promotions; personal selling, database marketing, and customer relations management; public relations and sponsorship programs.
- Integration tools – This is software that enables the tracking of customer behavior and campaign effectiveness. This includes customer relationship management (CRM) software, web analytics, marketing automation, and inbound marketing software.
12.5.3: Measuring Success
Continuous monitoring of performance against predetermined targets is essential in achieving effective & efficient integrated marketing communications.
List the most important analyses used to measure marketing performance
- It is important to put both quantities and timescales into marketing strategies.
- The most important elements of marketing performance include sales analysis, market share analysis, expense analysis, and financial analysis.
- Indirect measures like market research, tracking lost business and tracking customer complaints can also indicate the organization’s performance over a long period of time.
- relative share
market share in relation to the market leaders.
- segment share
market share in the specific, targeted segment.
Measuring Success Of Marketing Efforts
It is important for marketing managers to constantly evaluate the performance of their marketing efforts.
The final stage of any marketing planning process is to establish targets or standards so that progress can be monitored. Accordingly, it is important to put both quantities and timescales into marketing objectives and corresponding strategies. – for example, to capture 20 percent by value of the market within two years.
Continuous monitoring of performance against predetermined targets is of utmost importance. More important is the enforced discipline of a regular formal review. As with forecasts, the best or most realistic planning cycle will revolve around a quarterly review. Best of all – at least in terms of the quantifiable aspects of the plans – is a quarterly rolling review. This involves planning one full year ahead each new quarter. While this absorbs more planning resources, it also ensures that plans use the latest information. Moreover, both the plans and their implementation tend to be more realistic.
The most important elements of marketing performance which are normally tracked include:
- Sales Analysis: Sophisticated organizations track sales in terms of “sales variance” – the deviation from the target figures – which allows an immediate picture of deviations to become evident.
- Market Share Analysis: Market share is an important metric to track. Though absolute sales might grow in an expanding market, a firm’s share of the market can decrease, which bodes ill for future sales when the market starts to drop. Market share is tracked through parameters including overall market share, segment share, relative share, annual fluctuation rate of market share, and the specific market sharing of customers.
- Expense Analysis: The key ratio to watch in this area is usually the “marketing expense to sales ratio. ” This may be broken down into elements including advertising to sales and sales administration to sales.
- Financial Analysis: In theory, the “bottom line” of all marketing activities should be net profit. Key ratios include gross contribution to net profit, gross profit to return on investment, and net contribution to profit on sales. There can be considerable benefit in comparing these figures with those achieved by other organizations, especially those in the same industry.
The above performance analyses concentrate on quantitative measures directly related to short-term performance. However, there are a number of indirect measures tracking customer attitudes which can also indicate the organization’s performance over a longer period of time. These include market research, lost business and customer complaints.
12.5.4: The Growing Importance of Word of Mouth
Because of the increased role of sharing – or online “word of mouth” – the way many products and services are marketed has changed.
Define the growing role of word-of-mouth in integrated marketing communications
- Marketing was once seen as a one way relationship, with firms broadcasting their offerings and value proposition.
- The goal of an organization is to create and maintain communication with its own employees and customers.
- To understand new forms of word of mouth marketing involves knowing the right touch points to use to reach consumers and understanding how and where they consume different types of media.
- Regression analysis
a statistical technique for estimating the relationships among variables.
The Growing Importance of Word of Mouth
The Internet has changed the way business is done. The variables of segmentation, targeting, and positioning are addressed differently. Because of the increased role of sharing – or online “word of mouth” – the way new products and services are marketed has changed, even though the aim of business in bringing economic and social values remain the same. Indeed, the bottom line of increasing revenue and profit are still the same. Marketing has evolved to include more connectedness, due to the new characteristics brought in by the Internet. Marketing was once seen as a one way relationship, with firms broadcasting their offerings and value proposition. Now it is seen more as a conversation between marketers and customers .
Word Of Mouth Marketing
Social media sites that allow sharing have brought about a new word of mouth form of marketing.
The starting point of the integrated marketing communications (IMC) process is the marketing mix that includes different types of marketing, advertising, and sales efforts. Without a complete IMC plan, there is no integration or harmony between client and customers. The goal of an organization is to create and maintain communication with its own employees and customers. Using outside-in thinking, integrated marketing communications is a data-driven approach that focuses on identifying consumer insights and developing a strategy with the right online and offline combination of channels to forge a stronger brand to consumer relationship. This involves knowing the right touch points to use to reach consumers and understanding how and where they consume different types of media. Regression analysis and customer lifetime value are key data elements in this approach.
Several shifts in the advertising and media industry have caused IMC to develop into a primary strategy for marketers:
- From media advertising to multiple forms of communication
- From mass media to more specialized media, which are centered on specific target audiences
- From a manufacturer-dominated market to a retailer-dominated, consumer-controlled market
- From general-focus advertising and marketing to data-based marketing
- From low agency accountability to greater agency accountability, particularly in advertising
- From traditional compensation to performance-based compensation
- From limited Internet access to 24/7 Internet availability and access to goods and services
Moreover, this new “word of mouth” form of marketing can bring benefits to a company; such as:
- It can create competitive advantages, boost sales and profits, while saving money, time, and stress.
- IMC wraps communications around customers and helps them move through the various stages of the buying process. The organization simultaneously consolidates its image, develops a dialogue, and nurtures its relationship with customers.
- This “relationship marketing” cements a bond of loyalty with customers which can protect them from the inevitable onslaught of competition. The ability to keep a customer for life is a powerful competitive advantage.
- IMC also increases profits through increased effectiveness.
- Carefully linked messages also help buyers by giving timely reminders, updated information and special offers which, when presented in a planned sequence, help them move comfortably through the stages of their buying process.
- IMC also makes messages more consistent and therefore more credible. This reduces risk in the mind of the buyer which, in turn, shortens the search process and helps to dictate the outcome of brand comparisons.
- Finally, IMC saves money as it eliminates duplication in areas such as graphics and photography since they can be shared and used in say, advertising, exhibitions, and sales literature.