Chapter 14 Promotion and Pricing Strategies 5

Chapter 14
Promotion and Pricing Strategies
5 Describe pushing and pulling
promotional strategies.
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.
Outline the roles of sales
promotion, personal selling, and
public relations.
6 Discuss the major ethical issues
involved in promotion.
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.
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.
• 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 ___________ ___________.
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
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 ____________ 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 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
• 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.
• 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
• 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.
• 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 Stimulation of demand for a good, service, place, idea, person, or
organization by disseminating news or obtaining favorable unpaid media
• Good publicity can promote a firm’s positive image
• Negative publicity can cause problems.
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
• Most marketing situations require combinations of pushing and pulling
strategies, although the primary emphasis can vary.
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
• Schools earn income from in-school advertising, but it is generating
Price Exchange value of a good or service.
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
Competitive Pricing
• Reducing the emphasis on price competition by matching other
firms’ prices.
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.