The Promotional Mix

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The Promotional Mix

• SOM 660
• Berkowitz

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The Marketing Communications Mix
Advertising
Personal Selling
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Integrated Marketing Communications

• Advertising
• Advertising advantages
• Message content control
• Very large reach
• Flexibility images, symbols, and creative/ copy
  strategies.
• Advertising drawbacks
• Evaluating effectiveness is difficult
• Often very expensive
• Waste
• Noise
• Clutter.

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Integrated Marketing Communications

• Direct Marketing
• Direct marketing forms
• Telemarketing, direct-mail marketing, direct
  sales, Internet.
• Key advantages
• Customized messages, little waste, evaluation is
  easy (internet relatively so)
• Key drawbacks
• Consumer dislike, global restrictions, clutter,
  low response rates.

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Integrated Marketing Communications

• Sales Promotion
• Provide extra incentives to consumers or sales
  force to achieve a short-term objective.
• Consumer-Oriented Techniques
• Coupons, sweepstakes, rebates, samples, and
  point-of-purchase savings
• Objective stimulate short-term sales.
• Trade-Oriented Techniques
• Sales contests, training, and quantity discounts
• Objective obtain distribution.

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Integrated Marketing Communications

• Personal Selling
• The use of face-to-face communications between
  seller and buyer.
• Largest part of marketing budget for
  business-to-business marketers.
• Key advantages
• Customized presentations
• Immediate feedback to questions.
• Key drawbacks
• Expensive
• Control over final message delivered by sales
  representative is difficult.

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Integrated Marketing Communications

• Publicity and Public Relations
• Sponsoring organization normally does not pay for
  the communication.
• Publicity typically takes the form of an article
  in a magazine/newspaper or TV news coverage.
• Key advantage
• More credible than advertising.
• Key drawback
• Sponsoring company has little control over
  placement or content.

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Integrated Marketing Communications

• Packaging
• Can communication messages about benefits, as
  well as image.
• Trade shows
• Key business-to-business communication venue.
• Events and Sponsorships
• Product Placement on TV Shows and in Movies
  (Branded Entertainment)
• Product Demonstrations

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Promotion in the channel
Manufacturer
Wholesaler
Retailer
Consumer
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Push vs. pull
With a push strategy With a pull
strategy, you work through you bypass
the the channel
intermediaries and intermediaries.
appeal to the end
user
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Advertising PharmaceuticalsAn Effective Push
Strategy

• Spending on direct to consumers was 266 million
  in 1994
• Grew to 2.5 billion in 2000
• One in three adults has talked to a doctor about
  drug seen on ad
• One in eight has received a prescription in
  response to an ad

Kaiser Family Foundation, 2001
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The Stages of Decision Making and Communication
HIGH Low
Importance in Stage
Pre-purchase Purchase
Post-purchase
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Budget setting strategies
Advertising/promotion set your advertising
budget As a of sales as a fixed
percentage of last years sales competitive
parity set your advertising/promo budget
to match the
level spent by
your nearest competitor all you can afford
set your budget at whatever level the
level the CFO says
is left over for you objective and task
set intermediate objectives
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Hierarchy of effects model
awareness interest evaluation
trial adoption
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The Customer Pyramid
Loyalty Repeat Purchase Satisfaction Trial Eva
luation Interest Awareness
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Set Objectives along Each Level of the
Pyramid
Trial Evaluation Interest Awareness
Post measure
Pre-measure
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Keys of the Promotional Levels of the Pyramid

• MetricsPre and Post Measures
• Objectives for performance
• time bound
• target market
• quantitative

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awareness
within two quarters to increase from 10 to 15
the number of people in Baltimore who know of
the outpatient mental health service at
Metropolitan General to have 30 of the elderly
know of community Hospitals meals-on-wheels
program, two months after opening within thirty
days of set-up to have 75 of the physicians in
the upper peninsula of Michigan know of
University Hospitals helicopter service
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Interest
to generate 15 inquiries a month from eligible
corporations regarding our industrial health
program to have our data management
representative requested by at least one
hospital a week for an on-site presentation withi
n two weeks of opening to have at least fifty
physicians request information on our new lab
pick-up service
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Evaluation
to have at least 50 of the women in the
southwest area rate St. Johns obstetrical
service as the newest to have at least 20 of
the pediatricians rate our hospital as the
best for tertiary care
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Trial
within 60 days to have 75 of the daily patient
volume in the urgi-center be first time
triers within one year to generate five first
time referrals in nephrology from primary care
providers in James City
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Promotion Objectivescommon weaknesses

• failure to state objectives in quantifiable,
  detectable terms
• failure to realize the results of advertising
  cannot always be measured in terms of sales
• failure to identify the target market
• the use of superlatives which are unsupportable (
  i.e. .--to obtain maximum support)

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Developing Advertising Strategy

• determine audience to be reached
• determine the type of medium
• select specific vehicle

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Effective advertising

• buyer awareness is minimal
• industry sales are rising
• service features are not normally observable
• opportunities for differentiation are strong
• service is new/ not commonly advertised

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Media Costs

• Standard Measure often used is COST PER THOUSAND
• CPM Price of space or time unit 1000
• Circulation of (or Audience reached
• by medium)

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Profiles of Major Media Types
Newspapers Advantages Flexibility, timeliness
good local market coverage broad acceptance,
high believability Limitations Short life poor
reproduction quality small pass-along audience
Television Advantages Combines sight, sound,
motion high attention
high reach appealing to senses Limitations Hi
gh absolute costs high clutter fleeting
exposure less audience selectivity
Outdoor Advantages Flexibility high repeat
exposure low cost low
message competition Limitations Little audience
selectivity creative limitations
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Profiles of Major Media Types
Radio Advantages Mass use high geographic and
demographic selectivity low cost Limitations
Audio only fleeting exposure lower attention
nonstandardized rates
fragmented audiences
Magazines Advantages High geographic and
demographic selectivity credibility and
prestige high-quality reproduction long life
good pass-along readership Limitations Long ad
purchase lead time waste circulation
no guarantee of position
Direct-Marketing MethodsTelemarketing Advantages
Highest response rate of any direct marketing
method. Offers can be
tailored to the customer. DisadvantagesExpensive,
intrusive, generates negative publicity and bad
will.
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Profiles of Major Media Types
Radio Advantages Mass use high geographic and
demographic selectivity low cost Limitations
Audio only fleeting exposure lower attention
nonstandardized rates
fragmented audiences
Magazines Advantages High geographic and
demographic selectivity credibility and
prestige high-quality reproduction long life
good pass-along readership Limitations Long ad
purchase lead time waste circulation
no guarantee of position
Direct-Marketing MethodsTelemarketing Advantages
Highest response rate of any direct marketing
method. Offers can be
tailored to the customer. Disadvantages
Expensive, intrusive, generates negative
publicity and bad will.
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Profiles of Major Media Types
Direct E-mail AdvantagesInexpensive, creatively
flexible, easy to test/track. DisadvantagesSPAM
is prevalent response rates are low, many
commercial services and businesses block messages
using filters.
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Response Rate Report
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Only the brave or the ignorant can say exactly
what advertising does in the marketplace.
Martin
Mayer, Madison Avenue I know half the money I
spend on advertising is wasted. But I can
never find out what half.
Joseph Wanamaker
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• Developing the Message Strategy
• Evaluating Message Copy
• Many aspects should be pretested
• Message itself, spokesperson, execution approach
  and media.
• Laboratory and field testing can be used
• Laboratory tests carefully control the
  environment and allow for experimental
  manipulation, but respondents are studied in an
  unrealistic setting.
• Field tests occur under natural viewing
  conditions, but offer no control over extraneous
  factors which may influence ad response.

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Copy-Testing Methods
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Organizational Philosophies

• Consumer Jury
• Used for ad concept testing.
• Portfolio Tests
• Evaluates ad recall liking.
• Readability Tests
• Physiological Methods
• Pupil dilation, GSR/EDR and Eye tracking.
• Theater Tests
• Pretests TV commercials.
• Laboratory Stores
• Evaluates effect of ads on simulated shopping
  trip.

Evaluating Message Copy

• Laboratory Measures
• Real World Measures

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Organizational Philosophies

• Dummy ad vehicles
• Evaluates responses to test ads in dummy
  magazines.
• Inquiry tests
• Tracks inquiries generated from direct-response
  ads.
• On-the-air/recall tests
• Assesses recall of real TV ads inserted in
  programming.
• Recognition tests
• Starch through-the-book method posttests ads.
• Sales/minimarket tests
• BehaviorScan tests effect of alternative TV ad
  executions.

Evaluating Message Copy

• Laboratory Measures
• Real World Measures

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Sales Force Roles

• missionary
• market research
• sales
• cross selling

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Objectives

• Designing a Sales Force
• Managing the Sales Force
• Principles of Personal Selling

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Designing the Sales Force
Sales force objectives
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Sales Force Structures
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Sales Force Compensation

• Fixed
• Variable
• Expense Allowances

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Figure 13.11 Components and Objectives of
Compensation Plans
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Compensation Plan Objectives and Components

• Definitions
• Commission
• Payment based directly on a sale or some other
  activity.
• Salary
• The basic amount of money paid regularly to the
  salesperson.
• Incentive Payments
• Monetary awards for special performance.
• Sales Contests
• Competitions to achieve some short-term goal.

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Compensation Plan Objectives and Components
Compensation Plans

• Useful when
• Firms want to focus on long-term goals, such as
  relationship building.
• Management wants to encourage competitive
  analysis and marketing research activities by
  the sales force.
• Products or services have long selling cycles.

• Straight Salary
• Straight Commission
• Combination Plans

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Compensation Plan Objectives and Components
Compensation Plans

• Commission programs
• Give incentives by directly rewarding
  performance.
• Are easy to manage.
• Can be targeted.
• Offer little control over sales force activities.
• Hard to implement when national accounts and
  local sales forces overlap.
• Produce fluctuating sales.

• Straight Salary
• Straight Commission
• Combination Plans

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Compensation Plan Objectives and Components
Compensation Plans

• Combines salary with one or more additional
  financial incentives.
• Advantages
• Some incentive is given to the sales force to
  perform activities that dont directly generate
  revenue.
• The commission element rewards strong performers.

• Straight Salary
• Straight Commission
• Combination Plans

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Workload Approach to Sales Force Size

• Classify customers by size
• Determine desirable call frequencies
• Determine total sales calls needed per year
• Determine average number of sales calls per sales
  representative per year
• Divide total by number per rep

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Sales versus advertising
sales criteria
advertising High
technical sophistication
Low Few potential
customers Many Push
marketing strategy
Pull Complex DMU
Simple Many
ancillary services
Few Great degree of
risk Little