Business

MARK4210, 2014 Spring, L1/L2

MARK4210: Strategic Marketing

2014 Spring, Section L1/L2

[Class #18]

Promotion Strategies

2 MARK4210, 2014 Spring, L1/L2

Communicating

Promotion

Communicating value

Creating Value

Product Price

Capturing value

Distribution

Delivering value

The Role of Promotion

 Inform, persuade & remind the market about the

organization and/or its products

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Promotional Mix Elements

Element Description

Personal

selling

Presenting a product to a prospective customer by a

firm’s sales representative, usually face-to-face; often

used for ‘purchasing’ intermediaries

Advertising Paid, non-personal mass communication, in which the

sponsor is clearly identified; often used for end-users

Sales

promotion

Demand-stimulating activity designed to supplement

advertising and complement personal selling

Direct

Marketing

Directly selling goods to consumers rather than via

retailers – usually by direct-mail, telephone selling, or

the internet

Public

Relations

Planned communication effort by an organisation to

contribute to generally favourable attitudes and opinions

toward an organisation and its products Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Promotional Mix Elements (2)

Source: Integrated Marketing Communications and Direct Marketing, Kerin, Hartley, Rudelius, McGraw-Hill

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9-5

Choosing the Right Promotional

Element – Considerations (1)

1. The target market

 Household versus business customers

 Number and concentration of customers

 Determine customer’s readiness to buy (stage of

purchase behavior): Awareness  Knowledge 

Liking  Preference  Conviction  Purchase

Sources: Essential Marketing Skills, Peter Rix, McGraw Hill Australia; Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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9-5

Choosing the Right Promotional

Element – Considerations (2)

2. The nature of the product

 Durable versus non-durable

 Unit value of the product (purchase amount)

 Amount of product customization

 Amount of pre-sale and post-sale service required

 Perceived risks

Sources: Essential Marketing Skills, Peter Rix, McGraw Hill Australia; Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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9-5

Choosing the Right Promotional

Element – Considerations (3)

3. The stage of the product’s life cycle

 Market share

 Industry concentration

 Intensity of competition

 Product demand

4. Budget

Sources: Essential Marketing Skills, Peter Rix, McGraw Hill Australia; Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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Choosing the Right Promotional Mix

– Consumer Purchase Decision PRE-PURCHASE

 Advertising is most

valuable

 Informs potential

customers about the

existence of the product

and the seller

PURCHASE

 Importance of personal

selling is highest

 Sales promotion can

encourage demand

POST-PURCHASE

 Personal contact after

the sale leads to buyer

satisfaction.

 Advertising & personal

selling helps reduce

post-purchase anxiety

Source: Integrated Marketing Communications and Direct Marketing, Kerin, Hartley, Rudelius, McGraw-Hill

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9-8

Push vs. Pull Strategy: Push

Strategy Characteristics

 Producer creates demand for product

 Aims promotional activity to channel member(s)

 Each channel member promotes to next channel

member

 Demand ‘pushed’ down distribution channel

 Consumer influenced by retailer’s advertising

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Push vs. Pull Strategy: Pull Strategy

Characteristics

 Producer creates demand for product

 Aims promotional activity directly at the consumer

 Consumer demands product from retailer

 Demand ‘pulled’ up the distribution channel

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Push versus Pull Strategy:

Illustration

Source: Integrated Marketing Communications and Direct Marketing, Kerin, Hartley, Rudelius, McGraw-Hill

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Push vs. Pull Strategy:

Considerations on When to Use

 Degree of brand loyalty

 Degree of brand differentiation

 Purchase behavior – planned or impulsive

 Whether sales assistance is needed in making the

choice/ purchase

Source: Marketing Management, Kotler & Keller, Pearson, 2012

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Setting the Promotional Budget

 Percentage of sales method • Determine past or anticipated sales and apply a

percentage

 All available funds (or what can be afforded) • Use all available funds on the promotional campaign

 Competitive Parity • Match competition – promotions based on market share

of competitors, or actual expenditure if known

 Task or objective method (build-up) • Determine needed promotion tasks or objectives

• Determine cost to perform tasks or meet objective

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Personal Selling: Sales Force

Strategic Considerations

 Priority/emphasis between maintaining existing accounts versus converting new customers

 Increasing sales force productivity, e.g., leveraging technology and innovative sales techniques

 Targeting the ‘right’ people in the customer organization

 Sales force size

 Sales force motivation (financial, non-financial incentives)

 Sales force supervision – includes territory assignment, control, and communication

Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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Advertising: Types

 Consumer versus business advertising

 Emotional & rational vs informational

 Product versus institutional advertising

 Focus on particular product or brand, and

information and goodwill to company

 Stimulate demand for generic or specific brands

 Primary-demand versus selective-demand (brand)

advertising

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Advertising and the Product Life

Cycle

 Informative advertising

• Build initial demand during introductory phase of life cycle

 Persuasive advertising

• Improve the competitive status of a product, usually

during growth and maturity stages of product life cycle

 Comparative advertising

• Compares products directly with their competitors

 Reminder-oriented advertising

• Maintain awareness of the importance and usefulness of

a product, especially during late maturity or decline

stages of product life cycle

Source: Contemporary Business, David L. Kurtz, Louis E. Boone, Cengage Learning, 2009

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Advertising: Measuring Effectiveness

 Direct tests

• Measure or predict the sales volume stemming from an

advertising campaign

• Tabulate number of inquiries from a direct-response

campaign

 Indirect tests

• Measures something other than actual sales (e.g., recall

tests)

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Sales Promotions: Considerations

 What are our promotional objectives?

 Who is our target market?

 Can our product be sampled?

 What will it cost to use the right promotional tool?

 What is the current economic condition?

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Sales Promotions: Consumer-

oriented

 Premiums, Coupons, Rebates, Samples

• Coupons attract customers but focus on price rather than

brand loyalty

• Rebates increase purchase rates, promote multiple

purchases, and reward product users

 Games, Contests, and Sweepstakes

• Introduction of new products

• Subject to legal restrictions

 Specialty Advertising

• Gift of useful merchandise carrying the name, logo, or

slogan of an organization

Source: Contemporary Business, David L. Kurtz, Louis E. Boone, Cengage Learning, 2009

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Sales Promotions: Trade-oriented

 Sales promotions geared to distribution

intermediaries (NOT consumers)

 Objectives:

• To encourage stocking of new products

• To encourage continued stocking of existing products

• To encourage (sometimes “pressure”) intermediaries to

promote products to consumers

Source: Contemporary Business, David L. Kurtz, Louis E. Boone, Cengage Learning, 2009

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Public Relations: Examples

 Supporting charitable projects

 Supplying volunteers or other resources

 Participating in community-service events

 Sponsorship

 Providing information to customers via newsletters.

 Publicity can be achieved by:

• structured news-release to the media

• coordinating personal communication with a group

• coordinating one-to-one personal communication

(lobbying)

Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

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Announcements & Reminders

 PharmaSim Team Live Play Round 1 ends April 14 @8pm

• Round 1 data/results will be erased (!), make sure you download/record beforehand

 PharmaSim Team Live Play Round 2

• Starts April 22 @ 7am – Ends May 8 @ 8pm

• NO replay, NO restarts, NO consultation

• In-class team discussions on April 25 (Fri) & April 30 (Wed), LSKG005 -- NO consultations; attendance checked

 PharmaSim Final Report – email to [email protected] (copy all members) by May 9 class

 Guest Speaker on April 23 (Wed), 7-820pm, LTB

• Mr. Larry CHAN, Digital Marketing Manager, L’Oreal

• Attendance checked (or valid documented excuse)

• Replaces afternoon session (no class)