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Chapter 15 The Internet: Digital and

Social Media

15-2

Reasons for Rapid Adoption of the

Internet  Increased desire for information

 Speed and convenience

 Ability to control the flow of information being received

 Ability to conduct e-commerce

 E-commerce: Direct selling of goods and services on the internet

 Ability to target customers effectively

 Increased accountability of businesses

15-3

Web Objectives

Create awareness

Generate interest

Disseminate information

Create an image

Create a strong brand

Stimulate trial

Create buzz Gain

consideration

15-4

Differences in the Way Organizations Have Interacted

with Customers on the Web

15-5

Advertising on the Internet - Web 1.0

Banner ads

• Create awareness or recognition

• Used to seek entry into contests and sweepstakes

• Fulfill direct-marketing objectives

Sponsorships: Form of advertising

• Regular sponsorship - Company pays to sponsor a section of a site

• Content sponsorship: Sponsor not only provides money in return for name association but also participates in providing the content itself

15-6

Advertising on the Internet - Web 1.0

Pop-ups

• Ads that appear when certain sites are accessed

Pop-unders

• Ads that appear underneath the webpage and become visible only when user leaves the site

Interstitials

• Ads that appear on screen while waiting for a site’s content to download

15-7

Paid Searches

Higher a site appears on a search page the more visitors it will receive

• Appear due to their relevance to the search terms

Organic search results

• Placing ads on web pages that display results from search engine queries

Pay-per-click

• Improving the volume of traffic to a site by a search engine through unpaid results

Search engine optimization (SEO)

15-8

Behavioral Targeting

 Based on advertisers’ target consumers by tracking

their website surfing behaviors

 Retargeting

 Ads follow a web user and are displayed on every

participating subsequent websites the user visits

15-9

Contextual Advertising

 Ads are determined by the content on the webpage

 Native advertising

 Advertiser gains attention by providing valuable

content in the context of the user’s experience

 Controversial

 May be deceptive

15-10

Rich Media

Interactive digital media that exhibit dynamic motion

• Advertisements that appear on the net • Pre-rolls: Commercials that appear before the content that the user is seeking

Online commercials

• Video clips of various entertainment that can be availed on demand from the Internet

Video-on-demand

• Short featured films created by the advertiser

Webisodes

15-11

Web 2.0 Is a Multifaceted Version of the

Internet

15-12

Types of New Media

15-13

Social Media

 Allow the creation and exchange of user-generated

content

 Social networking sites: Platforms for networks or

social relations

 Allow sharing interests, activities, backgrounds, or

real-life connections

15-14

Motivations for Using Social Media

To share ideas, activities, and events

Community involvement

To gain information

Entertainment

Remuneration

15-15

Marketers’ Reasons for Using Social

Media

Driving traffic to one’s site

Communicating with customers

Gaining brand exposure

15-16

Facebook

 Allows advertising that targets subsets of Facebook

users

 Based on demographic and geographic data and

interests and activities

 Used to:

 Create and push content

 Help manage reputation

15-17

Twitter

 Enables users to send and receive text-based

messages up to 140 characters

 Benefits

 Best channel for direct communication with

customers

 Easy and cost-effective way to gain brand exposure

 Good ability to drive traffic directly to a site

15-18

Twitter

 Used to:

 Respond to customer complaints and/or inquiries

 Re-tweet important information

 Monitor the market for opportunities or threats

15-19

Google+

 Allows users to:

 Develop own profile

 Control profile appearance across the entire Google

network

 Allows for the development of a community

 Facilitates communication with customers

 Offers excellent brand exposure

15-20

YouTube

 Hosts content for information and entertainment

 Users can upload and share their own videos and

those placed by others

 Used as an advertising medium or search platform

by marketers

15-21

Additional Social Media

Instagram

• Online photo-sharing and social networking site

• Allows users to post and edit pictures and share them on a variety of social networks

• Pinboard-style photo-sharing website

• Allows users to create and manage theme-based image collections

• Used by marketers to connect to customers with specific interests that may be related to their brand

15-22

Podcasting, RSS, and Blogs

Podcasting

• Uses the Internet to distribute audio/video files

Really Simple Syndication (RSS)

• Specification that uses XML to organize and format web- based content in a standard way

Blog

• Web-based publication consisting primarily of periodic articles

• Presented in reverse chronological order

15-23

Other 2.0 Media Forms  Augmented reality apps

 QR codes: Barcodes used in print ads

 Near field communication (NFC)

 Delivers content through an embedded chip that

allows wireless communications just by touching the

material

 copy of a real world environment whose elements are

augmented (supplemented) by computer sensory input

QR codes add after ads that when scanned provide

additional content or take scanner to website; take out

print (appear in other places as well)

 may replace QR codes” 15-24

Sales Promotion on the Internet

Websites

Social media

Other forms of digital media

15-25

Personal Selling on the Internet

 Disadvantage

 Companies are reducing personal sellers and

building a strong online presence

 Advantages

 Websites enhance and support the selling effort

 Website visitors become part of a prospect database

 Enable serve and qualify prospects more cost-

effectively

15-26

Personal Selling on the Internet

 Stimulates trial

 Improves one-on-one relationships between

customers and sellers

 Increases the opportunity for cross-selling and

customer retention

15-27

Public Relations and Direct Marketing

on the Internet

 Websites

 Provide information about a company, its

philanthropic activities, and annual reports

 Internet based direct-marketing tools

 E-mails and infomercials

 E-commerce

 Used in direct marketing

15-28

Mobile

 Has significant impact on companies’ IMC

programs

 Rapid growth and adoption by consumers is

making marketers realise their potential in a

marketing context

15-29

Audience Measures and Measures of

Effectiveness  Internet-specific measures

 Allows measures to be taken in real time

 Includes audience measures specific to the Internet and interactive industry

 Traditional measures

 Recall and retention

 Surveys

 Sales

 Tracking

 ROI

15-30

Example Internet Metrics

Source: IAB.net

15-31

Advantages and Disadvantages of the

Internet, Digital and Social Media

Advantages

 Target marketing

 Message tailoring

 Interactive capabilities

 Information access

 Sales potential

 Creativity

 Exposure

 Speed

 Complement to IMC

Disadvantages

 Measurement problems

 Clutter

 Potential for deception

 Lack of privacy

 Irritation

Chapter 16 Sales

Promotion

16-2

Sales Promotion

 Direct inducement that offers an extra value or

incentive for the product to:

 Sales force

 Distributors

 Ultimate consumer

 Primary objective is to create an immediate sale

16-3

An extra incentive to buy

A tool to speed up sales

An extra incentive to buy

A tool to speed up sales

Targeted to different parties

Sales Promotion

“A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.”

16-4

Types of Sales Promotion Activities

16-5

Reasons for the Increase in Sales

Promotion

Growing power of retailers and declining brand loyalty

Increased promotional sensitivity

Brand proliferation

Fragmentation of the consumer market

Short-term focus and increased accountability

Competition and clutter

Growth of digital marketing

16-6

Concerns about the Increase in Sales

Promotion

 Devalues the brand

 Encourages consumers to purchase primarily on the

basis of price

 Leads to companies funding short-term promotions

and neglecting advertising

16-7

Consumer Franchise-Building versus

Nonfranchise-Building Promotions

Consumer franchise-building (CFB)

promotions

• Communicate distinctive brand attributes

and contribute to the development and

reinforcement of brand identity

• Build long-term brand preference

• Help achieve full-price purchases that are

not dependent on promotional offers

• Capable of converting consumers to loyal

customers

Nonfranchise-building (non-FB)

promotions

• Accelerate the purchase decision process

and generate an immediate increase in

sales

• Do not contribute to the building of brand

identity and image

• Merely borrow customers from other

brands

16-8

Objectives of Consumer-Oriented Sales

Promotion

 Obtaining trial and repurchase

 Increasing consumption of an established brand

 Defending current customers

 Targeting a specific market segment

 Enhancing integrated marketing communications

 Building brand equity

16-9

Consumer-Oriented Sales Promotion

Techniques

Sampling

• Giving some quantity of a product for no charge to induce trial

Couponing

• Most widely used, and most effective sales promotion tool

Premiums

• Offering a product or service either free or at a low price

Contests and sweepstakes

• Contest: Consumers compete for prizes or money on the basis of skills or ability

• Sweepstakes: Winners are determined purely by chance; does not require a proof of purchase

Refunds and rebates

• Offers by the manufacturer to return a portion of the product purchase price

16-10

Consumer-Oriented Sales Promotion

Techniques

Bonus packs

• Offer the consumer an extra amount of a product at the regular price by

Price-off deals

• Reduces the price of the brand

• Offered right on the package through specially marked price packs

Loyalty programs

• Offer opportunity to accumulate points for continuing to purchase their brands

• Points are redeemed for gifts and prizes

Event marketing

• Links a company or brand to an event or where a themed activity is developed

• Creates experiences for consumers for promoting a product or service

16-11

Sampling

Products are of relatively low unit value, so samples don’t

cost much

Products are divisible and can be broken into small sizes that

reflect the products features

and benefits

Purchase cycle is relatively short so the

consumer can soon purchase

again

Sampling Works Best When

16-12

Benefits and Limitations of Sampling

Benefits

• Provides consumers with a risk-

free way to try new products

• Generates much higher trial rates

than other sales promotion

techniques

• Consumers get to experience the

brand directly

Limitations

• Brand must have some unique or

superior benefits for sampling to

work

• Costs can be recovered only if

consumers become regular users

• May require larger amounts of

the product to produce favorable

results

16-13

Sampling Methods

Door-to-door sampling

Sampling through the mail

In-store sampling

On-package sampling

Event sampling

Sampling through magazines and newspapers

Sample request forms

Sampling through the internet and social media

16-14

Couponing

Over 300 billion distributed each year in the US

The oldest and

most widely used sales

promotion tool

90% of consumers

use coupons; 13% use

them regularly

16-15

Advantages and Limitations of

Couponing

Advantages

• Appeals to price-sensitive customers

• Does not require retailers’ cooperation

• Reduces consumer’s perceived risk

associated with trial of a new brand

• Encourages repeat purchase

• Helps coax users to trade up to more

expensive brands

Limitations

• Estimating how many consumers will use a

coupon and when is difficult

• Less effective for inducing initial product

trial in a short period

• Consumers already using the brand cannot

be prevented from using the coupons

• Have low redemption rates and high costs

• Could result in misredemptions

16-16

Coupon Distribution

 Freestanding inserts (FSIs)

 Advertising booklet that contains consumer

packaged goods coupon offers delivered with

newspapers

 Direct mail

 Coupons for different products is sent to a

household by local retailers or through co-op

mailings

16-17

Coupon Distribution

 In/on-pack coupons

 Bounce-back coupon: Redeemable for the next

purchase of the same brand

 Cross-ruff coupon: Redeemable on the purchase of

a different product

 Instant coupon: Attached to the outside of a

package and can be redeemed immediately

 In-store couponing: Co-op coupons distributed in

a retail environment

16-18

Couponing Trends

 Coupon usage remained high after the recent

recession

 Marketers are using them to compete against:

 Lower-priced competitors

 Private label store brands

 Internet and mobile marketing are used for coupon

distribution

16-19

Types of Premium

 Free premiums: Small gifts or merchandise:

 Included in the product package

 Sent to consumers who mail in a request along with

a proof of purchase

 Self-liquidating premiums: Require the consumer

to pay:

 Some or all of the cost of the premium

 Handling and mailing costs

16-20

Contests and Sweepstakes

Sweepstakes

Contest

Promotion where winners are determined purely by chance

Winners chosen by random selection from pool of entries or generation of a number

to match those held by game entrants

Consumers compete for prizes or money on the basis of skills or ability

Winners determined by judging entries or ascertaining which entry is closest

to predetermined criteria

Cannot require proof of purchase as a condition for entry

16-21

Limitations of Contests and

Sweepstakes

 Do not contribute to consumer franchise building

 Presence of professional entrants defeats the

purpose of the promotion

 Numerous legal considerations have to be

addressed

16-22

Advantages of Refunds and Rebates

 Consumers are very responsive

 Help create new users

 Encourage brand switching or repeat purchase

behavior

 Perceived price reduction for consumers who plan

to redeem but don’t

16-23

Limitations of Refunds and Rebates

 Effort required to obtain the savings act as deterrents

 Perception of rebates as attempts to sell products that are not faring well

 For small refunds, other promotional incentives are more effective

 Dependence on rebates leads to:

 Delayed purchases

 Purchase only if rebates are available

16-24

Advantages and Limitations of Bonus

Packs

Advantages

• Direct way to provide extra value

• Have a strong impact on the purchase decision at the time of purchase

• Effective defensive maneuver against competitor’s promotion

• May result in larger purchase orders and favorable display space in stores

Limitations

• Require additional shelf space without providing extra profit margins for retailers

• Appeal primarily only to current users and promotion-sensitive consumers

16-25

Advantages and Limitations of Price-off

Deals

Advantages

• Ensure discounts reach the consumers

• Present a readily apparent value to shoppers

• Encourage consumers to purchase larger quantities

Limitations

• Can create pricing and inventory problems

• Appeal primarily to regular users and not new users

• Must adhere to regulations set by the Federal Trade Commission

16-26

Advantages and Limitations of Loyalty

Programs

 Advantages

 Encourage consumers to use the products or services

on a continual basis

 Develop strong customer loyalty

 Help develop customer databases

 Limitations

 Many consumers drop out as it takes too long to

accumulate reward points

16-27

Event Marketing versus Event

sponsorship

Event marketing

• Company or brand is linked to an

event, or a themed activity is

developed to:

• Create experiences for

consumers

• Promote a product or service

Event sponsorship

• Company develops sponsorship

relations with an event and

provides financial support in

return for:

• Right to display a brand name,

logo, or advertising message

• Being identified as a supporter

of the event

16-28

Objectives of Trade-Oriented Sales

Promotion

 Obtain distribution for new products

 Maintain trade support for established brands

 Encourage retailers to display established brands

 Build retail inventories

16-29

Types of Trade Oriented Promotions

Buying

Promotional

Slotting

POP displays

Sales training

Trade shows

Contests and incentives

Trade allowances

Co-op Advertising Types

16-30

Types of Trade-Oriented Promotions

Contests and incentives

• Push money (pm): Cash payments made directly to the sales staff to encourage them to promote a product

Trade allowances

• Deal offered to encourage resellers to stock, promote, or display the manufacturer’s products

Displays and point-of-purchase materials

• Planograms: Configurations of products that occupy a shelf section in a store

16-31

Types of Trade-Oriented Promotions

Sales training programs - Provided through:

• Sponsored classes or training sessions

• Ongoing in-house training on a regular basis

• Detailed manuals, product brochures, reference manuals, and DVDs

Trade shows

• Forum where manufacturers can display their products to current and prospective buyers

Cooperative advertising

• Cost of advertising is shared by more than one party

16-32

Types of Trade Allowance

Buying allowances

• Price reduction on merchandise ordered during a fixed period

• Off-invoice allowance : Certain per-case amount or percentage is deducted from the invoice

Promotional allowances

• Given for performing certain promotional activities in support of a manufacturer’s brands

Slotting allowances

• Fees retailers charge for providing a slot or position to accommodate a new product

Failure fees

• To be paid to retailers if a new product does not hit a minimum sales level within a certain time

16-33

Types of Cooperative Advertising

Horizontal cooperative advertising • Sponsored by a group of retailers providing products or services

to the market

Ingredient-sponsored cooperative advertising • Supported by raw materials manufacturers

• Establishes end products that include the company’s materials and/or ingredients

Vertical cooperative advertising • Manufacturer pays for a portion of the advertising a retailer runs

to promote the manufacturer’s product

16-34

Coordinating Sales Promotion with Advertising

and Other IMC Tools

 Successful integration requires decisions

concerning:

 Budget allocation

 Coordination of ad and promotion themes

 Media support and timing

16-35

The Shifting Role of the Promotion

Agency

16-36

Consequences of Sales Promotion

Abuse

 Overuse of sales promotion leads to:

 Loss of a brand’s perceived value

 Purchase of product being attributed to to the

promotional incentive and not to a favorable attitude

toward the brand

 Sales promotion trap or spiral

16-37

The Sales Promotion Trap