PRICE INCENTIVE SALES PROMOTION Integrated Marketing Communications (IMC): A management concept designed to make all aspects of marketing communication work together as a unified force ● Advertising, Sales Promotions, Public Relations 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 ● Incentive to behave in a certain way-- think of it as a legal bribe: short term behavior oriented ● Advertising vs Sales Promotion: ○ Advertising: creates an image over time, relies on emotional appeals, advertising appeals to the heart (sales promotion appeals to the wallet), contributes somewhat to profitability, adds intangible value to a brand ● Sales Promotion vs Advertising: ○ Sales Promotion: creates immediate action, relies on rational appeals, contributes greatly to short term profitability, adds a tangible value to the product ● Coordinating Promotions: awareness before promotion, the two tools should speak with one voice (they should have the same overall message) Behavioral Learning: ● Future behavior is determined by reinforcement accompanying past behavior ● Promotional tools act as reinforcers along with product performance to increase the probability of repeat purchase-- ex:coupon helps to reinforce the purchase decisions. BUT if you do not like the product, you’re not going to buy it Shaping: The process of learning a complex behavior by learning a series of successive approximations of the final behavior-- you’re trying to shape consumer behavior ● Errors in Implementation: Improper fading & overuse of promotional incentives-- people are never going to pay full retail price because they’ve never had to pay that much because of coupons Price-Oriented Promotional Tools: ● Samples: product given to consumer free of charge, opportunity to try the product before making a purchase-- increases credibility ○ Eliminates financial risk & eliminates inconvenience ○ Effective when: (don’t have to have all four) ■ brand is clearly superior to the competition: ex: Coke vs Pepsi ■ Product comes in limited varieties ■ Purchase cycle is short-- ex: soft drinks ■ Attitudes or behaviors must be created or changed ex: convince men that coke zero isn’t going to taste like a diet drink. ● Coupons: Certificates presented to a dealer that give the bearer a stated savings on the purchase of a particular product, likely users are current users of the product ○ Retains current users -- not always as loyal as companies want us to be○ encourages brand switching-- one brand of greek yogurt over the other ○ Increases in-home inventory-- how much of a product you have in your home. Coupon gets you to buy 10 greek yogurts instead of 1, which increases your purchase cycle, therefore keeps you from brand switching ● Money Refunds/Rebates: Buy a product, mail in proof of purchase, refund sent at a later date ○ Redemption Problems: Delay of reinforcement (want to save $50 now instead of getting it later), effort required ADDED VALUE SALES PROMOTION Added Value Promotions: product is sold at full price,consumers get more for their $$, Doesn’t reduce price/value ratio ● Premium: An extra item offered at a low price or free as an extra incentive to purchase ○ Objectives: ■ Encourage brand switching ■ Trade up to larger size ■ Increase repeat purchase ■ Put a long term message in front of the consumer ○ Methods of Distribution: In package, in store, package itself , mail, online ● Sweepstakes: A game where participants have an equal chance of winning a prize, but make no payment to enter-- increase engagement & increase awareness ● Lottery: sweepstakes with a charge to enter, illegal in most situations, donations from non-profit organizations ● Contest: Winners are selected on the basis of the skill of their entry, charge to enter Promotions to Retailers: More $$ spent than on consumer promotions ● Objectives: ○ Retail objective to push the product vs pull product ○ Maintain or increase distribution ○ Maintain or expand shelf space ○ Preempt competition--when you get more, someone else is getting less ○ Influence consumer purchase patterns ● Types of Retail Promotions: ○ Buying allowances: temporary price reductions; from manufacturer to retailer (done behind the scenes) ○ Advertising allowances (Co-operative Advertising) : Payments made by the manufacturer to the retailer to fund the retailer’s advertising of the product ○ Contests ○ Sweepstakes ○ Point of Purchase (P.O.P): Promotional materials placed at the point of purchase ■ POP Objectives:● Increase consumer learning ● Increase purchase behavior-- impulse purchases ● Low cost production & Implementation-- ● Ease of evaluation ■ Good POP for Retailers ● Monetary incentive ● Tied to other items ● Easy to set up PUBLIC RELATIONS: PR is not free advertising-- a management function that formulates and executes a program of action to earn the understanding and goodwill of its publics Differences between advertising & PR: ● Advertising: goal is to inform, persuade and remind target to buy specific brands or products-- major advertising cost = media time & space, more control over message ● PR: goal = Develop understanding & goodwill, favorable attitudes-- PR is more credible--major PR cost = non-media, less control over message Interest: ● Advertising = editorial interest not very important, personnel more likely to have a business background ● PR -- critical to success-- personnel more likely to have a journalism background Advertising & PR Similarities: stimulate interest in a target, research based situation analysis, specific objectives, detailed knowledge of media Reasons to Use PR: ● Relatively inexpensive (compared to advertising) ● cuts through advertising clutter/noise ● highly credible ● opportunity to reach different people and develop new sales leads ● difficult to reach some publics with advertising Corporate Image Advertising: An umbrella category of advertising that if for the benefit of the overall company image rather than for individual products ● Corporate image advertising relationships to PR: share the same objectives as PR (goodwill & understanding), but paid time and space generates control over message/media ● Corporate image & Product
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