2. Learning Objectives
1 Discuss how integrated marketing 5 Outline the different types of pricing
communications relates to a firm’s overall objectives.
promotional strategy and explain the
concept of a promotional mix along with 6 Discuss how firms set prices in the
outlining the objectives of promotion. marketplace, and describe the four
alternative pricing strategies.
2 Summarize the different types of
advertising and advertising media. 7 Discuss consumer perceptions of
price.
3 Outline the roles of sales promotion,
personal selling, and public relations in a
promotional strategy.
4 Describe pushing and pulling promotional
strategies.
3. Promotion
s Promotion is the function of informing,
persuading, and influencing a purchase
decision.
s Integrated marketing communications (IMC)
is the coordination of all promotional activities—
media advertising, direct mail, personal selling,
sales promotion, and public relations—to
produce a unified, customer-focused message.
4. Integrated Marketing Communications
s Must take a broad view and plan for all form
of customer contact.
s Create unified personality and message for
the good, service, or brand.
s Elements include personal selling,
advertising, sales promotion, publicity, and
public relations.
5. Promotional Mix
s Promotional mix- combination of personal and
nonpersonal selling components designed to
meet the needs of their firm’s target customers
and effectively and efficiently communicate its
message to them.
s Personal selling- the most basic form of
promotion: a direct person-to-person
promotional presentation to a potential buyer.
s Nonpersonal selling- advertising, sales
promotion, direct marketing, and public relations.
8. Promotional Planning
s Product placement- marketers pay placement
fees to have their products showcased in various
media, ranging from newspapers and magazines
to television and movies.
s Guerilla marketing- innovative, low-cost
marketing efforts designed to get consumers’
attention in unusual ways.
9. Advertising
s Advertising- paid nonpersonal communication
usually targeted at large numbers of potential
buyers.
s Advertising expenditures are great– carmakers spend
$20 billion per year.
s Consumers are bombarded with many messages.
s Firms need to be more and more creative and
efficient at getting consumers’ attention.
10. Types of Advertising
s Product advertising- messages designed to sell a
particular good or service
s Institutional advertising- messages that promote
concepts, ideas, philosophies, or goodwill for
industries, companies, organizations, or government
entities
s Cause advertising- institutional messaging that
promotes a specific viewpoint on a public issue as a
way to influence public opinion and the legislative
process
s Avon Foundation
11. Advertising and the Product
Life Cycle
s Informative advertising- used to build initial
demand for a product in the introductory phase
s Persuasive advertising- attempts to improve the
competitive status of a product, institution, or
concept, usually in the growth and maturity stages
s Comparative advertising- compares products
directly with their competitors either by name or by
inference
s Reminder-oriented advertising - appears in the
late maturity or decline stages to maintain
awareness of the importance and usefulness of a
product
13. Types of Advertising
s Magazines
s Television s Consumer publications and trade
s Easiest way to reach a large journals
number of consumers
s Can customize message for
s Most expensive advertising different areas of the country
medium
s Direct Mail
s Newspapers s Average American receives 550
s Dominate local advertising pieces annually
s Relatively short life span s High per person cost, but can be
s Radio carefully targeted and highly
effective
s Commuters in cars are a captive
audience s Outdoor Advertising
s Internet radio offers new s $5.9 billion annually
opportunities s Requires brief messages
s Internet Advertising
s Search engine marketing, display
ads, classified ads
14. Types of Advertising
s Online and Interactive Advertising
s Viral advertising creates a message that is novel or
entertaining enough for consumers to forward it to others,
spreading it like a virus.
s Many consumers resent the intrusion of pop-up ads that
suddenly appear on their computer screen.
s Sponsorship
s Providing funds for a sporting or cultural event in exchange
for a direct association with the event.
s Benefits: exposure to target audience and association with
image of the event.
s Other Media Options
s Marketers look for novel ways to reach customers:
infomercials, ATM receipts, directory advertising.
15. Sales Promotion
s Sales promotion
consists of forms of
promotion such as
coupons, product
samples, and rebates
that support
advertising and
personal selling.
16. Customer-Oriented Promotions
s Premiums, Coupons, Rebates, Samples
s Coupons attract new customers but focus on price rather than brand
loyalty.
s Rebates increase purchase rates, promote multiple purchases, and
reward product users.
s Three of every four consumers who receive a sample will try it.
s Games, Contests, and Sweepstakes
s Introduction of new products.
s Offer cash, merchandise, or travel as prizes to participating winners.
s Subject to legal restrictions.
s Specialty Advertising
s Promotional items that prominently display a firm’s name, logo, or
business slogan.
17. Trade-Oriented Promotions
s Sales promotion geared to marketing
intermediaries rather than to consumers
s Encourage retailers:
s To stock new products
s To continue carrying existing ones
s To promote both new and existing products effectively
to consumers
18. Personal Selling
s A person-to-person promotional presentation to
a potential buyer
s Many companies consider personal selling the key to
marketing effectiveness.
s A seller matches a firm’s goods or services to the
needs of a particular client or customer.
s Today, sales and sales-related jobs employ about 16
million U.S. workers.
s Businesses often spend five to ten times as much on
personal selling as on advertising.
s Example: Selling to the government or military.
19. Sales Tasks
s Order Processing
s Identifying customer needs, pointing out merchandise to meet
them, and processing the order
s Creative Selling
s Promotes a good or service whose benefits are not readily
apparent or whose purchase decision requires a close analysis
of alternatives
s Missionary Selling
s Indirect form of selling in which the representative promotes
goodwill for a company or provides technical or operational
assistance to the customer
s Telemarketing
s Personal selling conducted entirely by telephone, which provides
a firm’s marketers with a high return on their expenditures, an
immediate response, and an opportunity for personalized two-
way conversation
21. Prospecting, Qualifying, and Approaching
s A good salesperson
varies the sales process
based on customers’
needs and responses.
s Prospecting- identifying
potential customers
s Qualifying- identifying
potential customers
s Approaching- analyzing
available data about a
prospective customer’s
product lines and other
pertinent information
22. Presentation and Demonstration
Presentation
s Salespeople communicate
promotional messages.
They may describe the
major features of their
products, highlight
the advantages, and cite
examples of satisfied
consumers.
Demonstration
s Reinforces the message
that the salesperson has
been communicating.
23. Handling Objections and Closing
s Use objections as an
opportunity to answer
questions and explain how
the product will benefit the
customer.
s The closing is the critical
point in the sales process.
s Even if the sale is not
made, the salesperson
should regard the
interaction as the
beginning of a potential
relationship.
24. Follow-Up
s An important part of
building a long-lasting
relationship.
s May determine whether
the customer will make
another purchase.
25. Public Relations
s Public relations- a public organization’s
communications and relationships with its various
audiences.
s Is an efficient, indirect communications channel for promoting
products. It can publicize products and help create and
maintain a positive image of the company.
s Publicity- nonpersonal stimulation of demand for a
good, service, place, idea, event, person, or
organization by unpaid placement of information in
print or broadcast media.
s Good publicity can promote a firm’s positive image.
s Negative publicity can cause problems.
26. Promotional Strategy
s Pushing strategy- relies on personal selling to market an item to
wholesalers and retailers in a company’s distribution channels.
s Companies promote the product to members of the marketing channel,
not to end users.
s Pulling strategy- promote a product by generating consumer
demand for it, primarily through advertising and sales promotion
appeals.
s Potential buyers will request that their suppliers—retailers or local
distributors—carry the product, thereby pulling it through the distribution
channel.
s Most marketing situations require combinations of push and pull
strategies
s Cooperative advertising- allowances provided by marketers in
which they share the cost of local advertising of their firm’s product
or product line with channel partners.
28. Pricing Objectives
s Price- exchange value of a good or service.
s Profitability objectives
s Maximize profits by reducing costs.
s Maintain price while reducing package size.
s Volume objectives
s Base pricing decisions on market share goals.
s Pricing to meet competition
s Meeting competitors’ price.
s Competitors cannot legally work together to set prices.
s Competition can result in a price war.
29. Pricing Strategies
Prestige Objectives
s Establishing a relatively high price to develop
and maintain an image of quality and
exclusiveness.
s Recognition of the role of price in
communicating an overall image for the firm
and its products.
s Products that are limited in distribution or so
popular that they become scarce generate
their own prestige.
30. Cost-Based Pricing
s Formulas that calculate total costs per unit and
then add markups to cover overhead costs and
generate profits.
s TOTAL COSTS PLUS MARKUP
s Actual markup used varies by such factors as
brand image and type of store.
s Typical markup for clothing is determined by doubling
the wholesale price (the cost to the merchant).
31. Break-Even Analysis
s Breakeven analysis- pricing technique used to
determine the minimum sales volume a product
must generate at a certain price level to cover all
costs.
33. Alternative Pricing Objectives
s Skimming pricing
s Setting an intentionally high price relative to the prices of competing products
s Helps marketers set a price that distinguishes a firm’s high-end product from
those of competitors
s Penetration pricing
s Setting a low price as a major marketing weapon
s Often used with new products
s Everyday low pricing and discount pricing
s Maintaining continuous low prices rather than relying on short-term price-cutting
tactics such as cents-off coupons, rebates, and special sales
s Discount pricing - businesses hope to attract customers by dropping prices for a
set period of time
s Competitive pricing
s Reducing the emphasis on price competition by matching other firms’ prices
s Concentrating marketing efforts on the product, distribution, and promotional
elements of the marketing mix
34. Consumer Perceptions of Price
s Price-quality relationships
s Consumers’ perceptions of quality closely tied
to price
s High price = prestige and higher quality
s Low price = less prestige and lower quality
s Odd pricing
s Setting prices in uneven amounts or amounts
that sound less than they really are
s Example: $1.99 or $299
