Chapter 15 Promotions The Role of Promotion A Promotional Strategy is a plan for the optimal use of the elements of promotion A test question about this de nition on the exam Interpersonal Communication vs Mass Communication Marketing communicators are both Senders Inform persuade and remind Receivers Develop adapt messages and spot new communication opportunities of 1 10 Goals and Tasks of Promotion Informing Introduction and early growth stages Reminding Maturity stage Persuading Growth and Maturity Stages Connecting is not part of the 3 main goals All Stages All geared toward your Target Market Informing Increase awareness Explain how product works Suggest new uses Build company image Persuading Encourage brand witching Change customer perceptions of product attributes In uence immediate buying decision Persuade customer to call Reminding Remind customers that product may be needed remind customers where to buy product maintain customer awareness The Promotional Mix A combination of promotional tools used to reach the target market and ful ll the organization s overall goals the promotional mix includes The AIDA Concept is a model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message Attention Interest Desire Action Thinking Feeling Doing of 2 10 Advertising Attention and Interest Personal Selling Interest Desire Action Integrated Market Communication is the careful coordination of all promotional messages to assure the consistency of messages at every contact point where a company meets the consumer Integrated Market Communications have grown in popularity due to Multiple media choices options Easier fragmentation of the mass market Slash of advertising spending in favor of promotional techniques that generate immediate response Factors affecting the promotional mix Nature of the product Stage in the product life cycle target market characteristics Type of buying decision Promotion funds Push or pull strategy of 3 10 Chapter 16 Advertising and Market Share New brands with a small market share spend proportionally more for advertising Beyond a certain level of spending diminishing returns set in New brands require higher spending to reach minimum level of exposure needed and sales promotion that those with a large market share to affect purchase habits reinforce a positive attitude Effects on consumers Advertising may change a consumers negative attitude toward a product or Serious or dramatic advertisements are more affective at changing consumers Humorous ads are more effective at shaping attitudes when consumers already negative attitudes have a positive image of a brand Institutional Advertising Product advertising Enhances a company s image rather that promote a particular product Touts the bene ts of a speci c good or services Type of Advertising Pioneering Competitive Comparative Attribute Stimulates primary demand for new product or category Used in the Introductory stage In uences demand for the brand in growth phase of the product life cycle Often uses emotional appeal Compares two or more competing brands product attributes Used if growth is sluggish or if its toward the end of its product life cycle Identifying Product Bene ts Sell the sizzle not the steak Sell a product s bene ts not its attributes A bene t should answer What s in it for me Ask So to determine if advertising offers attributes or bene ts of 4 10 Unique selling proposition A desirable exclusive and believable advertising appeal selected as the theme for a campaign Media Scheduling Continuous Media Schedule Advertising is run steadily throughout the period Flighted Media Schedule Advertising is run heavily every other month or every two Pulsing Media Schedule Advertising combines continuous scheduling with Seasonal Media Schedule Advertising is run only when the product is likely to be ighting weeks used Functions of Public Relations Press releases Product publicity Corporate communication Public affairs Lobbying Employee and investors relations Crisis management Chapter 19 The Importance of Price To the seller price is revenue To the consumer price is the cost of something Price allocates resources in a free market economy What is price The sacri ce effect of price The information effect of price Price is that which is sacri ced to get a good or service People infer quality information based on price Price may infer status Reasonable price means perceived reasonable value Value is based upon perceived satisfaction of 5 10 Pro t maximization means setting prices so that total revenue is as large as possible relative to total costs but it s important to remember that this does not mean just setting the price as high as possible Return on Investment The net pro t after taxes divided by the total assets Return on Marketing investment The sales generated divided by the marketing costs Sales Oriented Pricing Objectives Market Share A company s product sales as a percentage of total sales for that Sales Maximization Rather than drive for market share sometimes companies try industry to maximize sales This is used as a short term objective to maximize sales It ignores pro ts competition and the marketing environment It may be used to sell off excess inventory Examples from class decoy products ways to charge customers more without increasing prices How demand affects price Price Equilibrium is the price at which demand and supply are equal Elasticity of Demand price changes Elastic demand is the when consumers buy more or less of a product when the Inelastic demand is where a change in price doesn t affect the demand for products Elasticity of demand is consumers responsiveness or sensitivity to changes in prices Elasticity of demand could be affected by the availability of substitutes the price relative to purchasing power the product durability a product s other uses or the rate Yield Management Systems Yield management systems make it possible for a company to Stimulate demand when demand is low of in ation of 6 10 Maximize pro ts when demand is high Ex Airline Tickets Discounting early purchases Limiting early sales at discounted prices Overbooking capacity Variable Vs Fixed Cost Variable Costs Vary in respect to the amount produced Fixed Costs Are the same no matter how much is produced Marginal Cost The change in total costs associated with a one unit change in output Method Markup Pricing Keystoning Pro t Maximization Marginal Revenue