ADV 3008 Exam 3 Study Guide – summer_2013 I Love Saving Money – 7/23/2013 Price Incentive Sales Promotion • Integrated Marketing Communication a management concept designed to make all aspects of marketing communication work together as a unified force o Advertising o Sales Promotion o Public Relations o Not all of these work entirely independently • Sales Promotion a direct inducement which offers an extra value or incentive for the product to the sales force, distributors, or the final consumer with the primary objective of creating an immediate sale o Incentive to behave in a certain way (bribe) Short term behavior oriented • Advertising vs. Sales Promotion o *Advertising appeals to the heart o *Sales promotion appeals to the wallet o Creates an image over time Ex: how we think of Apple over time o Relies on emotional appeals Advertising to the heart Sales promotion to the wallet o Contributes somewhat to profitability Long term profitability o Adds intangible value to the product o If you put humor in the ad, it doesn’t add value to the actual product • Sales Promotion vs. Advertising o Creates immediate action o Rational appeals Ex: buy one, get one free Money is more rational to people o Contributes significantly to short term profitability o Adds tangible value Get additional product because of promotion • Coordinating Promotions o Awareness before promotion This is created through the advertising Comes first o Speak with one voice Tone’s of both products should integrate • Behavioral Learning o Future Behavior id determined by reinforcement accompanying past behavior If you buy a product and like it you get positive reinforcement want to keep buying the producto Promotional tools act as reinforces along with product performance (the primary reinforcement) to increase the profitability of repeat purchase Product is the primary reinforcer (the trigger) Promotion is the kicker • But it cannot save a bad product Brand loyal consumer are the ideal • Shaping the process of learning a complex behavior by learning a series of successive approximations of the final behavior o Over time you are trying to shape consumer behavior Takes time to transform brand loyal consumers o Errors in implementation Improper fading • Ex: if you do not have a coupon, may go back to an old product Overuse • Ex: people overuse he product because of the coupon but, they only value the product at coupon price • Ex: Pizza ads always have a special because people are use to it o People see the value of pizza at the sale price • If you train a consumer to buy products with a coupon risk is going to back to buying at retail • Price Oriented Promotional Tools o Samples Product given to consumer free of charge Opportunity to try the product before making a purchase • Eliminates two big issues when company faces product trial: o Eliminate financial risk o Eliminate inconvenience People often do not know where to buys a new product Samples Effective When: (Ex: Coke Zero Ad commercial, product was brought in for a different product purchaser than Diet Coke, aimed towards men and used sampling for them to try product) • Brand is clearly superior o In a blind taste testing for coke zero, they compared it with regular coke o Gave product to consumer so they can decide because coke new the product was superior • Product comes in limited varieties • Purchase cycle is short o Sample now, buy it 10 minutes later • Attitudes or behaviors must be created or changed o Zero calorie drink for men o Coupons certificates presented to a dealer that give the bearer a states savings on the purchase of a product Likely users are current users of the product • Person most likely to use a coupon is the consumer of the product • Why do we coupon: o Retains current userso Encourages brand switching People will switch when they see a deal o Increases in-home inventory Amount of product a consumer has at home This is valid with larger purchases to help get more inventory which lengthens the purchase cycle • Forces people to not buy another brand o Lengthens purchase cycle o Money Refunds/ Rebates Used usually for more expensive items • Ex: Cellphones A partial refund following a purchase • Consumer purchases product • Mail in proof of purchase • Refund send at a later time o Redemption problems Delay of reinforcement • Rather buy the product that saves you money immediately Effort required • Have to follow the rules of the rebate • People have forgotten to do it o Company knows this information Fall out factorI Get What? I Don’t Have to Pay for It? Added Values Sales Promotion • Added Value Promotion o Adds value to product instead of cutting down the price Ex: codes under caps • Make you buy more of the product in order to get gains of code o Product is sold at full price o Consumers get more for their money o Doesn’t reduce price/value ratio o PremiumAn extra item is offered at a low price or free as an extra incentive to purchase It is a separate and different item Not cheaping value of the original product • Gets consumer in the habit of buying at a regular price • Ex: if you buy $75 worth of make up, they give you a tote bag o Objectives of Premium Encourage brand switching • Steal competitor • Trade up to large size • Increase repeat purchase o Ex: McDonalds Happy Meal toy Want to purchase often to collect toys, keeping you away from competitor • Put a long term message in front of the consumer o Methods of distribution In package In store Package itself Mail • Send coupon in the mail Online • SweepstakesA game where participants have an equal chance of winning a prize, but make no payment to enter o Increases engagement o Increases awareness o Ex: McDonalds Monopoly (1 in 4 wins) Brings people in No purchase necessary Still don’t have to give you a card without a purchase Need to send in personal letter to corporate office • Lottery: o Sweepstakes with a charge to enter o Illegal in most situations But the lottery is run by the government • Donations from
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