Promotional Strategies

Promotional Strategies

What Is Promotion?

Promotion may take the form of direct, face-to-face interaction or indirect communication through such media as floor ads, television, radio, magazines, newspapers, direct mail, billboards, the Internet, and other channels. How does a firm decide on which forms of promotion to use? Many companies develop a promotional strategy; that is, they define the direction and scope of the promotional activities they will take to meet their marketing objectives by setting promotional goals and developing a promotional mix.

Promotional Goals

You can use promotion to achieve three basic goals: to inform, to persuade, and to remind. Informing is the first promotional priority, because people cannot buy something until they are aware of it and know what it can do for them. Potential customers need to know where the item can be purchased, how much it costs, and how to use it. Persuading is also an important priority, because most people need to be encouraged to purchase something new or to switch brands. Advertising that meets this goal is classified as persuasive advertising. Reminding the customer of the products availability and benefits is also important, because such reminders stimulate additional purchases. The term for such promotional efforts is reminder advertising.

Beyond these general goals, your promotional goals should accomplish specific objectives: They should attract new customers, increase usage among existing customers, aid distributors, stabilize sales, boost brand-name recognition, create sales leads, differentiate the product, and influence decision makers.

The Promotional Mix

The promotional mix typically includes a blend of various elements. The most efficient mix depends on the nature of the market and the characteristics of the goods and services being marketed. Over time, the mix for a particular product may change.

Elements of Promotion

Personal selling

Advertising

Direct marketing

Sales promotion

Public relations

A companys promotional mix typically includes a blend of the following elements: personal selling, sales promotion, advertising, direct-marketing tools, and public relations that work best for the firms product variables, market, and desired objectives. The most effective mix depends on the nature of the market and the characteristics of the good or service being marketed. Over time, the mix for a particular product may change.

Product Variables

Various types of products lend themselves to differing forms of promotion. Simple, familiar items such as laundry detergent can be explained adequately through advertising, but personal selling is generally required to communicate the features of unfamiliar and sophisticated goods and services such as office-automation equipment or municipal waste-treatment facilities. As this chapter will later explain, the complexity of a product and its familiarity in the marketplace will dictate the best forms of promotion to use.

The products price is another factor to consider in selecting an appropriate  promotional mix. Inexpensive items such as shaving cream or breakfast cereal sold to a mass market are well suited to advertising and sales promotion, which have a relatively low per-unit cost. At the other extreme, products with a high unit price such as in-ground swimming pools lend themselves to personal selling because the high cost of a sales call is justified by the price of the product.

The products position in its life cycle also influences promotional choices. Early on, when the seller is trying to inform the customer about the product and build the distribution network, promotional efforts are in high gear. As the market expands during the growth phase, the seller broadens its advertising and sales-promotion activities to reach a wider audience and continues to use personal selling to expand the distribution network. When the product reaches maturity and competition is at its peak, the sellers primary goal is to differentiate the product from rival brands. As the product begins to decline, the level of promotion generally tapers off. Advertising and selling efforts are carefully targeted toward loyal, steady customers.

Market Variables

Selection of an appropriate promotional mix is also influenced by the size and concentration of the target market. In markets with many widely dispersed buyers, advertising is generally the most economical way of communicating the products features. In markets with relatively few customers, particularly when they are clustered in a limited area, personal selling is a practical promotional alternative. Many marketers use a combination of methods.

When selecting a promotional mix, a firm must also decide whether it will focus its marketing effort on intermediaries or on final customers. If the focus is on intermediaries, the producer uses a push strategy to persuade wholesalers and retailers to carry the item. If the marketing focus is on end users, the producer uses a pull strategy to appeal directly to the ultimate customer, using advertising, direct mail, contests, discount coupons, and so on.

Types of Sales Personnel

By almost any measure, personal selling is the dominant form of promotional activity. Most companies spend twice as much on personal selling as they do on all other marketing activities combined, even as technology is drastically changing the entire selling process. Regardless of their title, salespeople can be categorized according to three broad areas of responsibility: order getting, order taking, and sales support services.

Order getters are responsible for generating new sales and for increasing sales to existing customers. . Order getting is sometimes referred to as creative selling, particularly if the salesperson must invest a significant amount of time in determining what the customer needs, devising a strategy to explain how the product can meet those needs, and persuading the customer to buy.

Order takers do little creative selling; they primarily process orders. Regardless of how salespeople use the term, order takers in the true sense play an important role in the sales function. With the aim of generating additional sales, many companies are beginning to train their order takers to think more like order getters.

Sales support personnel generally dont sell products, but they facilitate the overall selling effort by providing a variety of services. Their responsibilities can include looking for new customers, educating potential and current customers, building goodwill, and providing service to customers after the sale. The three most common types of sales support personnel are missionary, technical, and trade salespeople.

Support Functions

Missionary Sales

Technical Sales

Trade Sales

The three most common types of sales support personnel are missionary, technical, and trade salespeople.

Missionary salespeople are employed by manufacturers to disseminate information about new products to existing customers (usually wholesalers and retailers) and to motivate them to sell the product to their customers. Manufacturers of pharmaceuticals and medical supplies use missionary salespeople to call on doctors and pharmacists. They leave samples and information, answer questions, and persuade doctors to prescribe their products.

Technical salespeople contribute technical expertise and assistance to the selling function. They are usually engineers and scientists or have received specialized technical training. In addition to providing support services to existing customers, they may also participate in sales calls to prospective customers. Companies that manufacture computers, industrial equipment, and sophisticated medical equipment use technical salespeople to sell their products as well as to provide support services to existing customers.

Trade salespeople sell to and support marketing intermediaries. Producers such as Hormel, Nabisco, and Sara Lee use trade salespeople to give in-store demonstrations, offer samples to customers, set up displays, restock shelves, and work with retailers to obtain more shelf space. Increasingly, producers work to establish lasting, mutually beneficial relationships with their channel partners, and trade salespeople are responsible for building those relationships.

Personal Selling Process

Many salespeople follow a carefully planned process from start to finish, as Exhibit 15.3 suggests. But personal selling involves much more than performing a series of steps.

1. Prospecting is the process of finding and qualifying potential customers. This step involves three activities: (1) generating sales leadsnames of individuals and organizations that might be likely prospects for the companys product; (2) identifying prospectspotential customers who indicate a need or a desire for the sellers product; and (3) qualifying prospectsthe process of figuring out which prospects have both the authority and the available money to buy.
2. With a list of hot prospects in hand, the salespersons next step is to prepare for the sales call. Without this preparation, the chances of success are greatly reduced.
3. Next, the salesperson decides how to approach the prospect. Possible options for a first contact include sending a letter or making a cold call in person or by telephone. A positive first impression results from three elements. The first is an appropriate appearance. Second, a salespersons attitude and behavior can make or break a sale. Third, a salespersons opening lines should include a brief greeting and introduction, followed by a few carefully chosen words that get the prospects attention and generate interest.
4. The most crucial step in the selling process is the presentation. It can take many forms, but its purpose never varies: to personally communicate a product message that will persuade a prospect to buy. Most sellers use one of two methods: canned approach or need satisfaction approach.
5. No matter how well a presentation is delivered, it doesnt always conclude with an immediate offer that might move the prospect to buy. Often the prospect will express various types of objections and concerns throughout the presentation. In fact, the absence of objections is often an indication that the prospect is not all that interested.
6. Closing is the stage of the selling process when you persuade the customer to place an order. Companies dont make any money unless the prospect decides to buy. Closing techniques are numerous; among the more popular are the alternative proposal close, the assumptive close, the silent close, and the direct close.
7. Most salespeople depend on repeat sales and referrals from satisfied customers, so its important that they follow up on all sales and not ignore the customer once the first sale is made.

Advertising and Direct Marketing

• Product Awareness
• Product Image
• Consumer Demand

All forms of advertising and direct marketing have three objectives: to create product awareness, to create and maintain the image of a product, and to stimulate consumer demand.

Types of Advertising

Business professionals generally refer to advertising by its type.

Product advertising is the most common type, designed to sell specific goods or services. Product advertising generally describes the products features and may mention its price. The term competitive advertising is applied to those ads that specifically highlight how a product is better than its competitors. When two or more products are directly contrasted in an ad, the technique being used is comparative advertising.

Institutional advertising is designed to create goodwill and build a desired image for a company rather than to sell specific products. Green marketing creates an image of companies as corporate conservationists. When used as corporate advertising, institutional advertising often promotes an entire line of a companys products. Institutional ads can also be used to remind investors that the company is doing well. Institutional ads that address public issues are called advocacy advertising.

Advertising can also be classified according to the sponsor. National advertising is sponsored by companies that sell products on a nationwide basis. In contrast, local advertising is sponsored by a local merchant. Grocery store ads in the local newspaper are a good example. Cooperative advertising is a financial arrangement in which companies with products sold nationally share the costs of local advertising with local merchants and wholesalersa cross between local and national advertising.

Many companies with tight advertising budgets rely on word-of-mouth advertising to build their market share. Buzz marketing is similar to word-of-mouth advertising. Companies seek out trendsetters in communities and subtly push them into talking up a brand or product to friends and admirers.

Stealth advertising is a commercial message that sneaks up on consumers where they least expect it. They messages blur programming and advertising by hyping products and services in TV news and talk shows and interviews with celebrities who are actually paid endorsers. Movies are notorious for stealth ads. Characters driving BMWs, drinking Coca-Cola, and flying on American Airlines are just a few examples.

Advertising Appeals

All well-designed ads make a carefully planned appeal to whatever motivates the audience.

Some ads use a logical appeal to persuade the audience with data. When selling technical products, some industrial and high-tech marketers assume that logic is the only reasonable approach.

Even with the most unemotional sort of product, emotions can be a significant factor in the decision process because all people have hopes, fears, desires, and dreams, regardless of the products they buy.

Using celebrities in ads is a common emotional appeal tactic. Celebrities can bring new value, excitement, humor and energy to a product that may not be possible with other types of advertising. The idea is that people will be more inclined to use products endorsed by a celebrity because they will identify with and want to be like the celebrity.

A tenant of advertising is that sex sells. The classic technique is to have an attractive, scantily attired model share the page or TV screen with the product. The model may bring nothing to the ad beyond a visual focus point. The goal is to have the audience associate the product with pleasure.

Direct Marketing Vehicles

In addition to personal selling and advertising, direct marketing is an effective promotional tool used by many companies.

The principal method of direct marketing is direct mail, which includes catalogs, brochures, videotapes, computer disks, and other materials delivered through the U.S. Postal Service and private carriers.

E-mail marketing works much the same way as mailing a letter. Companies build databases of e-mail addresses by enticing customers to register on a website in exchange for information or access to a special offer.

Like targeted e-mail, web ads can be sent to specific interest groups or individuals. Advertisers can tailor a unique pitch to the individual and use interactive options to gather information about the viewer.

Telemarketing, or selling over the telephone, is another popular form of direct marketing. Telemarketing is a low-cost way to efficiently reach many people.

Television infomercials are longer forms of commercials30 to 60 minutesthat have the appearance of regular TV programs but provide viewers with a toll-free number to place an order. Infomercials are useful selling tools for products that need some form of demonstration or technical explanation.

Choosing Suitable Media

Media Plan

Budget

Allocation

Timing

Media Mix

Print

Broadcast

Other Media

Once you select which forms of advertising you will use, you must get your message to your target audience by choosing suitable media, or channels of communication. Your media plan is a document that shows your advertising budget, how you will divide your money among various media, and when your ads will appear. The goal of your media plan is to make the most effective use of your advertising dollar.

The critical task in media planning is to select a media mix, the combination of print, broadcast, and other media for the advertising campaign. When selecting the media mix, the first step is to determine the characteristics of the target audience and the types of media that will reach the largest audience at the lowest cost per exposure. The choice is also based on what the medium can do (show the product in use, list numerous sale items and prices, and so on). The second step in choosing the media mix is to pick specific vehicles in each of the chosen media categories.

Major Advertising Media

Newspaper

Television

Direct Mail

Radio

Magazines

Internet

Advertising media fall into six major categories, each with its own strengths and weaknesses. When selecting the media mix, companies attempt to match the characteristics of the media audiences with the characteristics of the customer segments being targeted. A typical advertising campaign involves the use of several media.

Sales Promotion

Consumer Promotion

Trade Promotion

The fourth element of promotion, sales promotion, consists of short-term incentives to encourage the purchase of a product or service. Because the impact of sales promotion activities is often short term, sales promotions are not as effective as advertising or personal selling in building long-term brand preference. Sales promotion consists of two basic categories: consumer promotion and trade promotion.

Consumer Sales Promotions

Coupons Samples

Rebates Premiums

Point-of-Purchase

Cross-Promotions

Special-Event Advertising

Specialty Advertising

Consumer promotion is aimed directly at final users of the product. Companies use a variety of consumer promotional tools and incentives to stimulate repeat purchases and to entice new users:

The biggest category of consumer promotionand the most popular with consumersis coupons, certificates that spur sales by giving buyers a discount when they purchase specified products.

With rebates, buyers generally get reimbursement checks from the manufacturer by submitting proofs of purchase along with a prepared manufacturers rebate form.

The point-of-purchase (POP) display is a device for showing a product in a way that stimulates immediate sales.

Samples are an effective way to introduce a new product, encourage nonusers to try an existing product, encourage current buyers to use the product in a new way, or expand distribution into new areas.

Sponsoring special events has become one of the most popular sales promotion tactics. Thousands of companies spend billions of dollars to sponsor events ranging from golf to opera.

With cross-promotion, one brand is used to advertise another, non-competing brand.

Other popular consumer sales promotion techniques include in-store demonstrations, loyalty and frequency programs such as frequent-flyer miles, and premiums, which are free or bargain-priced items offered to encourage the consumer to buy a product. Contests, sweepstakes, and games are also quite popular in some industries and can generate a great deal of public attention, particularly when valuable or unusual prizes are offered. Specialty advertising (on pens, calendars, T-shirts, and so on) helps keep a companys name in front of customers for a long period of time.

Trade Sales Promotion

Trade Allowances

Display Premiums

Contests or Sweepstakes

Travel Bonus Programs

Although shoppers are more aware of consumer promotion, trade promotion actually accounts for the largest share of promotional spending. Trade promotions are aimed at inducing distributors or retailers to sell a companys products. The most popular trade promotion is a trade allowance, which involves a discount on the products price or free merchandise that brings down the cost of the product. Besides trade allowances, other popular trade promotions are display premiums, dealer contests or sweepstakes, and travel bonus programs. All are designed to motivate distributors or retailers to push particular merchandise.

Public Relations

Professional Firms

Press Relations

News Conferences

Press Releases

Public relations, the fifth element of promotion, plays a vital role in the success of most companies, and that role applies to more than just the marketing of goods and services.

Sometimes companies hire public relations firms to help them maintain or restore their public image. Another way that companies build good reputations is by maintaining good relations with both the general news media and specialized trade media. Press relations is the process of communicating with newspapers, magazines, and broadcast media.

Two standard public relations tools are the news release and the news conference. A news release is a short memo sent to the media covering topics that are of potential news interest; a video news release is a brief video clip sent to television stations. Companies use news releases to get favorable news coverage about themselves and their products. When a business has significant news to announce, it will often arrange a news conference. Both tools are used when the companys news is of widespread interest, when products need to be demonstrated, or when company officials want to be available to answer questions from the media.

Integrated Marketing Communications

Public relations

Personal selling

Advertising

Direct marketing

Sales promotion

Integrated marketing communications (IMC) is a strategy of coordinating and integrating all of a companys communications and promotion efforts to provide customers with clarity, consistency, and maximum communications impact. Coordinating the five elements of promotion delivers a consistent message to the marketplace. Properly implemented, IMC increases marketing and promotional effectiveness.

KEY TERMS

Advertising - paid, no personal communication to a target market from an identified sponsor using mass communications channels

Advocacy advertising - ads that present a company's opinions on public issues such as education and health

Banner ads - rectangular graphic displays on a webpage that are used for advertising and linked to an advertiser's webpage

Canned approach - selling method based on a fixed, memorized presentation

Closing - point at which a sale is completed

Comparative advertising - advertising technique in which two or more products are explicitly compared

Competitive advertising - ads that specifically highlight how a product is better than its competitors

Consumer promotion - sales promotion aimed at final consumers

Cooperative advertising - joint efforts between local and national advertisers, in which producers of nationally sold products share the costs of local advertising with local merchants and wholesalers

Coupons - certificates that offer discounts on particular items and are redeemed at the time of purchase

Creative selling - selling process used by order getters, which involves determining customer needs, devising strategies to explain product benefits, and persuading customers to buy

Cross-promotion - jointly advertising two or more noncompeting brands

Direct mail - advertising sent directly to potential customers, usually through the U.S. Postal Service

Direct marketing - direct communication other than personal sales contacts designed to affect a measurable response

Forward buying - retailers taking advantage of trade allowances by buying more products at discounted prices than they hope to sell

Institutional advertising - advertising that seeks to create goodwill and to build a desired image for a company rather than to sell specific products

Integrated marketing communications (lMC) - strategy of coordinating and integrating communications and promotions efforts with customers to ensure greater efficiency and effectiveness

Local advertising - advertising sponsored by a local merchant

Media - communications channels, such as newspapers, radio, and television

Media mix - the combination of print, broadcast, and other media used for the advertising campaign

Media plan - written plan that outlines how a company will spend its media budget, including how the money will be divided among the various media and when the advertisements will appear

Missionary salespeople - salespeople who support existing customers, usually wholesalers and retailers

National advertising advertising sponsored by companies that sell products on a nationwide basis; refers to the geographic reach of the advertiser, not the geographic coverage of the ad

Need-satisfaction approach - selling method that starts with identifying the customer's needs and then creating a presentation that addresses those needs; this is the approach used by most professional salespeople

News conference - gathering of media representatives at which companies announce new information; also called a press briefing or press conference

News release - brief statement or video program released to the press announcing new products, management changes, sales performance, and other potential news items; also called a press release

Order getters - salespeople who are responsible for generating new sales and for increasing sales to existing customers

Order takers - salespeople who generally process incoming orders without engaging in creative selling

Personal selling - in-person communication between a seller and one or more potential buyers

Persuasive advertising - advertising designed to encourage product sampling and brand switching

Point-of-purchase (POP) display - advertising or other display materials set up at retail locations to promote products to potential customers as they are making their purchase decisions

Premiums - free or bargain-priced items offered to encourage consumers to buy a product

Press relations - process of communicating with reporters and editors from newspapers, magazines, and radio and television networks and stations

Product advertising - advertising that tries to sell specific goods or services, generally by describing features, benefits, and, occasionally, price

Promotional mix - particular blend of personal selling, advertising, direct marketing, sales promotion, and public relations that a company uses teach potential customers

Promotional strategy - statement or document that defines the direction and scope of the promotional activities that a company will use to meet its marketing objectives

Prospecting - process of finding and qualifying potential customers

Public relations - nonsales communication that businesses have with their various audiences (includes both communications with the general public and press relations)

Pull strategy - promotional strategy that stimulates consumer demand via advertising and a number of consumer promotions, thereby exerting pressure on wholesalers and retailers to carry a product

Push strategy - promotional strategy that uses the sales force and a number of trade promotions to motivate wholesalers and retailers to push products to end users

Qualified prospects - potential buyers who have both the money needed to make the purchase and the authority to make the purchase decision

Reminder advertising - advertising intended to remind existing customers of a product's availability and benefits

Sales promotion - wide range of events and activities (including coupons, rebates, contests, in-store demonstrations, free samples, trade shows, and point-of purchase displays) designed to stimulate interest in a product

Sales support personnel - salespeople who facilitate the selling effort by providing such services as prospecting, customer education, and customer service

Specialty advertising - advertising that appears on various items such as coffee mugs, pens, and calendars, designed to help keep a company's name in front of customers

Technical salespeople - specialists who contribute technical expertise and other sales assistance

Telemarketing - selling or supporting the sales process over the telephone

Trade allowance - discount offered by producers to wholesalers and retailers

Trade promotions - sales-promotion efforts aimed at inducing distributors or retailers to push a producer's products

Trade salespeople - salespeople who sell to and support marketing intermediaries by giving in store demonstrations, offering samples, and so on