Final Exam Study GuideADV 3008Main Points:- Budget Strategies- Conclusion LecturePrice Incentive Sales PromotionIntegrated Marketing Communication: A management concept designed to make all aspects of marketing communication work together as a unified force. All of these operate under one umbrella.- Advertising- Sales Promotion: works with advertising- Public Relations- Direct MarketingSales Promotion- overall purpose is to create salesA direct inducement which offers an extra value or incentive for the product to the salesforce, distributors, or the final consumer with the primary goal of creating an immediatesale.- Incentive to behave in a certain way- Advertising vs. Sales Promotiono Advertising creates an image over timeo Advertising relies on emotional appeals Emotion, advertising to the heart Sales promotion to the wallet. “Save 50%!”o Advertising contributes somewhat to profitability: build brand equityo Advertising adds intangible value by creating an identity This doesn’t change the product, just the way you look at it- Sales promotion vs. Advertisingo Sales promotion creates immediate action. Ex. “Buy one, get one”o Sales promotion has rational appeals: ex. An $80 value is different to everyoneo Sales promotion contributes significantly to short term profitability: works for a bit (3 or 4 weeks) then dies out.o Sales promotion adds tangible value- Coordinating Promotions: both of these have to be coordinatingo Awareness before promotion- advertising builds promotion, you hear about salespromotion through advertising.o Speak with one voice- should be a consistent overall messageBehavioral Learning: changing behavior takes time- Future behavior is determined by reinforcement accompanying past behavior. Ex. A dogis a behavioral learner. Reinforcement = A Treat- Promotional tools act as reinforcers along with product production (the primary reinforcement) to increase probability of repeat purchase: if a product isn’t good (to you) or isn’t working, sales promotion doesn’t work.Shaping: is the process of learning a complex behavior by learning a series of successive approximations of the final behavior. It takes time!-2 Errors in implementation:1. Improper fading of incentives- one attempt2. Overuse of incentives- Some users get into these promotion that they cannot get out of so they build it into the price. Ex. Bed, Bath, and Beyond, Shoe Station3 Price Oriented Promotional Tools: cheapen the value of a productThere are 3; Samples, Coupons, and Money Refunds/Rebates1. Samples- a small portion of a product with no cost- Samples eliminate financial risk to the consumer (its free!)- Samples eliminate inconvenience to the consumer (no need to search for the free product)- Samples are effective when:o the brand being given out is clearly superior. Ex. Coke Zeroo Product comes in limited varieties: it can be more effectiveo Purchase cycle is short: ex. Soft drinks- taste today, buy todayo Attitudes or behaviors must be created or changed- Sample delivery methodso Mail- historically been the most effective way. Problem: It’s expensiveo Door to door- sampling based on zip codes.. etc..o In store- ex. Grocery storeso On package o Internet- ex. Video games, or software like Virus Protection2. Coupons- Certificates presented to a dealer that give the bearer a stated savings on the purchase of a product.- Likely coupon users are current users of the producto Retains current userso Encourages brand switching: not everyone is loyal to one brando Increases in-home inventory which also lengthens the purchase cycle. If your inventory is large then there is no need to go buy more.- Popular delivery methods for coupons: Direct mail (segmented based on shopping history), print media (newspaper and magazines), In/on packages (peel offs), and non-traditional (internet, smart phone apps).3. Money Refunds/Rebates- *Largest is automobiles-Consumer purchases a product, mails in proof of purchase, and a refund is sent at a later time. o Problems: Delay of reinforcement (rather have the money now) and Effort is required (save receipt, proof of purchase, you may forget or miss deadline)Added Value Sales PromotionAdded Value Promotions- Product is sold at full price: no discount- Consumers get more for their money: ex. Bonus packs- Doesn’t reduce price/value ratio: adding value builds loyalty- Premium: An extra item offered at a low price or free as an extra incentive to purchase. Ex. Receive a free gift bag with purchase of $50 or more *most common added value promotiono Objectives of Premiums: Encourage brand switching, trade up to larger size, increase repeat purchase (collect a set to receive something), and to put a long-term message in front of the consumer (ex. Every time you use the gift you see the logo).- Methods of distribution: in package, in store, on the product itself (ex. Cups sold at Doak), and mail (ex. Box tops in return for DVD’s)Sweepstakes: a game where participants have an equal chance of winning a prize, but make no payment to enter. Sweepstakes increase involvement with the brand, and increase awareness with the brand.Lottery: Sweepstakes with a charge to enter, illegal in most situations. Contests: winners selected based on skills/talent, A charge to enter (purchase or entry fee)Promotions to Retailers: *more money spent on this than on any other added value promotions-Objectiveso Retail incentive to push product: push from manufacturer, pull from consumer.o Maintain or increase distribution: geographic distributiono Maintain or expand shelf space: There is limited space on shelves. If you have more product on the shelves than the competition then you sell more producto Preempt Competitiono Change consumer purchase patterns- 2 Types of retail promotions: Giving money to retailerBuying allowances and advertising allowances:1. Buying allowances: (most commonly used in retail promotion) they cause temporary price reductions. Buying allowances are from manufacturer to retailer. 2. Advertising allowances: - Payments by the manufacturer to the retailer (to pay for some or all of the advertising of that product). *the more they buy, the more advertising they get.- Funding of the retailer’s advertising of the product.- Contests and sweepstakes: create excitement to retailer for the product.- Point of Purchase (P.O.P)- promotional materials placed at the point of purchase.o Types of P.O.P Outside signs, window displays, counter
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