Chapter 14 Promotion and Pricing Strategies 5 Describe pushing and pulling promotional strategies. 1 Discuss how integrated marketing communications relates to a firm’s overall promotion strategy. 2 Explain promotional mix and outline the objectives of promotion. Summarize the different types of 3 advertising and advertising media. 4 Outline the roles of sales promotion, personal selling, and public relations. 6 Discuss the major ethical issues involved in promotion. 7 Outline the different types of pricing strategies. Discuss how firms set prices in 8 the marketplace, and describe the four alternative pricing strategies. 9 Discuss consumer perceptions of price. Promotion… Integrated marketing communications (IMC) Coordination of ____ promotional activities—media advertising, direct mail, personal selling, sales promotion, and public relations—to produce a ____________ customer-focused message. INTEGRATED MARKETING COMMUNICATIONS • Must take a broad view and ___________ for all form of customer contact. • Create unified ____________ and ____________ for the good, service, or brand. • Elements include personal selling, advertising, sales promotion, publicity, and ___________ ___________. THE PROMOTIONAL MIX Promotional mix Combination of personal and nonpersonal selling techniques designed to achieve promotional objectives. Personal selling Interpersonal promotional process involving a seller’s face-toface presentation to a prospective buyer. • Nonper sonal selling Advertising, sales promotion, direct marketing, and public relations. Objectives of Promotional Strategy Promotional Planning • Product placement Marketers pay placement fees to have their products showcased in various media, ranging from newspapers and magazines to television and movies. • Guer illa mar keting Innovative, low-cost marketing efforts designed to get consumers’ attention in unusual ways. ADVERTISING Advertising ____________ nonpersonal communication delivered through various media and designed to inform, persuade, or remind members of a particular ____________. Types of Advertising • ____________ advertising, ___________ advertising, ___________ advertising Advertising and the Product Life Cycle • Informative advertising Build ____________ demand for a product. • Persuasive advertising Improve the ____________ status of a product. • Reminder-oriented advertising Maintain awareness of the importance and usefulness of a ____________. Advertising Media • All media offer advantages and disadvantages SALES PROMOTION Sales promotion Nonpersonal marketing activities other than advertising, personal selling, and public relations that stimulate consumer purchasing and dealer effectiveness. Consumer-Oriented Promotions Premiums, Coupons, Rebates, Samples • Two of every five promotion dollars are spent on premiums, items given free or at reduced price with the purchase of another product. • Coupons attract new customers but focus on price rather than brand loyalty. • Rebates increase purchase rates, promote multiple purchases, and reward product users. • Three of every four consumers who receive a sample will try it. Games, Contest, and Sweepstakes • Often used to introduce new goods and attract new customers. • Subject to legal restrictions. Specialty Advertising • Gift of useful merchandise carrying the name, logo, or slogan of an organization. Trade-Oriented Promotions • Sales promotion geared to marketing intermediaries rather than to consumers. • Encourage retailers in several ways: • To stock new products. • To continue carrying existing ones. • To promote both new and existing products effectively to consumers. • Point-of-purchase (POP) adver tising Displays or demonstrations that promote products when and where consumers buy them, such as in retail stores. • Promote goods and services at trade shows. PERSONAL SELLING • A person-to-person promotional presentation to a potential buyer. • Usually used under four conditions: • Customers are relatively few in number and geographically concentrated. • The product is technically complex, involves trade-ins, and requires special handling. • The product carries a relatively high price. • It moves through direct-distribution channels. • Example: Selling to the government or military. Sales Tasks • All involve assisting ____________ in some way. Order Processing • Identifying _________ ________, pointing out merchandise to meet them, and processing the order. Creative Selling • Promoting a good or service whose benefits are not readily apparent or whose purchase decision requires a close ____________ of ____________. Missionary Selling • Representative promotes ____________ for a company or provides technical or operational assistance to the customer. Telemarketing • Personal selling conducted by ____________; regulated by the Federal Trade Commission’s 1996 Telemarketing Sales Rule. The Sales Process Public Relations Public relations Public organization’s communications and relationships with its various audience. • Helps a firm establish awareness of goods and services and builds a positive image of them. Publicity Publicity Stimulation of demand for a good, service, place, idea, person, or organization by disseminating news or obtaining favorable unpaid media presentations. • Good publicity can promote a firm’s positive image • Negative publicity can cause problems. PROMOTIONAL STRATEGY Pushing and Pulling Strategies • Pushing str ategy Relies on personal selling to market an item to wholesalers and retailers in a company’s distribution channels. • Companies promote the product to members of the marketing channel, not to end users. • Pulling str ategy Promote a product by generating consumer demand for it, primarily through advertising and sales promotion appeals. • Potential buyers will request that their suppliers—retailers or local distributors—carry the product, thereby pulling it through the distribution channel. • Most marketing situations require combinations of pushing and pulling strategies, although the primary emphasis can vary. ETHICS IN PROMOTION Puffery and Deception • Puffer y Exaggeration about the benefits or superiority of a product. • Deception Deliberately making promises that are untrue, such as guaranteed weight loss in five days, get-rich-quick schemes for would-be entrepreneurs, or promised return on investments. Promotion to Children and Teens • Children and teens have enormous purchasing power but cannot analyze advertising messages. Promotion in Public Schools and on College Campuses • Schools earn income from in-school advertising, but it is generating backlash. PRICING OBJECTIVES IN THE MARKETING MIX Price Exchange value of a good or service. PRICING STRATEGIES •. Price Determination in Practice Cost-based pricing Adding a ____________ (markup) to the base cost of a product to cover overhead costs and generate profits. • Actual markup used varies by such factors as ________ image and type of store. • Example: Typical clothing markup by retailers is double the wholesaler price. Breakeven Analysis Breakeven analysis Pricing technique used to determine the ____________ sales volume a product must generate at a certain price level to cover _________ costs. Alternative Pricing Strategies Skimming Pricing • Setting an intentionally high price relative to the prices of competing products. Penetration Pricing • Setting a low price as a major marketing weapon. Everyday Low Pricing and Discount Pricing • ELP Maintaining continuous low prices rather than relying on short-term pricecutting tactics such as cents-off coupons, rebates, and special sales. • Discount pricing Attracting customers by dropping prices for a set period of time. Competitive Pricing • Reducing the emphasis on price competition by matching other firms’ prices. CONSUMER PERCEPTIONS OF PRICE Price-Quality Relationships • Consumers’ perceptions of quality closely tied to price. • High price = prestige and higher quality. • Low price = less prestige and lower quality. Odd Pricing • Setting prices in uneven amounts or amounts that sound less than they really are. • Example: $1.99 or $299. • Also used as a signal a product is on sale.