* * * Using Effective Promotional Techniques *

* * * Using Effective Promotional Techniques *

* * * Using Effective Promotional Techniques * CHAPTER ** 16 Nickels * McHugh McGraw-Hill/Irwin Understanding Business, 8e

* McHugh 1-1 16-1 2008 The McGraw-Hill Companies, Inc., All Rights * * * Traditional Promotional Mix Advertising Personal Selling Product

Public Relations Sales Promotion 16-2 * * * Steps In A Promotional Campaign 1. Identify the target market 2. Define the objectives 3. Determine the promotional budget 4. Develop a unifying message 5. Implement the plan 6. Evaluate effectiveness 16-3 *

* * I. PROMOTION AND THE PROMOTION MIX Learning goal 1 Define promotion and list the four traditional tools that make up the promotion mix. II. ADVERTISING: FIGHTING TO KEEP CONSUMER INTEREST Learning goal 2 Define advertising and describe the advantages and disadvantages of various advertising media, including the Internet. The Growing Use of Infomercials Advertisers Are Moving to the Internet Global Advertising 16-4 * * *

III. PERSONAL SELLING: PROVIDING PERSONAL ATTENTION Learning goal 3 Illustrate the steps of the B2B and B2C selling processes. Steps in the Selling Process The Business-to-Consumer (B2C) Sales Process IV. PUBLIC RELATIONS: BUILDING RELATIONSHIPS Learning goal 4 Describe the role of the public relations department, and tell how publicity fits in that role. Publicity: The Talking Arm of PR 16-5 * * * V. SALES PROMOTION: GETTING A GOOD DEAL Learning goal 5 Explain the importance of various forms of sales promotion, including sampling. Sampling Word of Mouth

How New Technologies Are Affecting Promotion VI. MANAGING THE PROMOTION MIX: PUTTING IT ALL TOGETHER Learning goal 6 Give examples of word of mouth, viral marketing, blogging, and podcasting. Promotional Strategies 16-6 * * * PROMOTION AND THE PROMOTION MIX Learning goal 1 PROMOTION is an effort by marketers to inform and remind people in the target market and about products and to persuade them to participate in the exchange. These tools include advertising, personal selling, public relations, and sales promotion. The combination of promotional tools an organization uses is called its

PROMOTION MIX. INTEGRATED MARKETING COMMUNICATION (IMC) is a technique that combines all the promotional tools into one comprehensive and unified promotional strategy. Recently, companies have added INTERNET PROMOTIONS to the mix. All promotional tools and company resources are used to build better relationships with customers. 16-7 * * * Advertising Advertising media: Newspaper, television, radio, magazines, outdoor, direct mail, yellow-pages, Internet The growing use of Infomercials Moving to the Internet Global advertising 16-8

* * * II. ADVERTISING: FIGHTING TO KEEP CONSUMER INTEREST Learning goal 2 ADVERTISING is paid, non-personal communication through various media by organizations and individuals who are in some way identified in the advertising message. PROPAGANDA is nonpersonal communication that DOES NOT HAVE AN IDENTIFIED SPONSOR. Total ad volume exceeds $245 billion yearly. TELEVISION is the number one advertising medium in terms of total dollars spent. DIRECT MAIL is number two, with NEWSPAPERS a close third. In 2005, INTERNET ADVERTISING increased 15.7% over the previous year. 16-9 *

* * The public BENEFITS FROM ADVERTISING: Advertising is INFORMATIVEit provides information about products, prices, features, and so on. Advertising provides us with FREE TV AND RADIO PROGRAMS, because advertisers cover most of the production costs. Advertising costs cover the major costs of producing newspapers and magazines. Newspapers, radio, and the Yellow Pages are especially attractive to LOCAL ADVERTISERS. TV has many advantages to national advertisers, but it is expensive. However, few other media can REACH AS MANY PEOPLE with such impact. 16-10 * * *

PRODUCT PLACEMENT is putting products into TV shows and movies where they will be seen. Marketers must choose which media and which programs will best reach the audience they desire. RADIO ADVERTISING is less expensive than TV advertising and often reaches people when they have few distractions. The glut of commercials on radio has driven some people to COMMERCIAL-FREE RADIO such as Sirius or XM. 16-11 * * * THE GROWING USE OF INFOMERCIALS An INFOMERCIAL is a full-length TV program devoted exclusively to promoting goods and services. They are so successful because they show the product in great detail. A half-hour infomercial is the equivalent of sending your best salespeople into a

persons home. Some products, such as work-out tapes, are hard to sell without showing testimonials. ADVERTISERS ARE MOVING TO THE INTERNET Digital video recorders (DVRs) let consumers skip the ads on TV, making TV less attractive to advertisers. .Some advertisers are putting their ads online. Marketers can reach customers as they are researching their product through advertising on popular online sites. If users click through an ad to the Web site, the company gets to interact with the customer. The goal is to GET CUSTOMERS AND POTENTIAL CUSTOMERS TO A WEB SITE where they can learn more about the company and its products. 16-12 * * * INTERACTIVE PROMOTION is a promotion process that allows marketers to go beyond a monologue, where sellers tried to persuade buyers to buy things, to a dialogue in which buyers and sellers can work together to create

mutually beneficial exchange relationships. TECHNOLOGY has improved the speed and potential of Internet dialogues. The current trend in Internet marketing is to BUILD RELATIONSHIPS with customers over time. Advertisers can track how many people click through the commercial and what Web sites they read and watch. 16-13 * * * GLOBAL ADVERTISING refers to developing a product and promotional strategy that can be implemented worldwide. Because of differences in culture, language, and buying habits, promotional efforts designed specifically for individual countries may work best. Getting the words right in international advertising is critical, but tricky. .International advertising calls for researching

THE WANTS AND NEEDS OF PEOPLE in each country. Even in the U.S., selected groups are large enough and different enough to call for specially designed promotions. 16-14 * * * Advertising today is evolving from GLOBALISM (one ad for everyone in the world) to REGIONALISM (specific ads for each country or for specific groups within a country.) III. PERSONAL SELLING: PROVIDING PERSONAL ATTENTION Learning goal 3 PERSONAL SELLING is the face-to-face presentation and promotion of products and services. It also involves searching out prospects and providing followup service after the sale. 16-15 *

* * Effective selling today is more than persuading others to buy; it is helping them to SATISFY THEIR WANTS AND NEEDS. Salespeople now use TECHNOLOGY, such as the Internet, portable computers, and fax machines, to help customers and to complete the sale. Because personal attention for customers is expensive, some companies are REPLACING SALESPEOPLE WITH INTERNET SERVICES. Nearly 10% of the total labor force is employed in personal selling, and the demand for salespeople is rapidly increasing. Over 7 million people are employed in sales. 16-16 * * * Seventy-seven percent of companies are hiring more field sales representatives. Top sellers can make more than their direct supervisor.

The average cost of a single sales call to a potential B2B buyer is about $400. STEPS IN THE SELLING PROCESS CONSUMER RELATIONSHIP MANAGEMENT (CRM) is becoming critically important to establishing long-term relationships with customers. The text uses the example of a software salesperson. The selling process for B2B and for consumer products is similar. In both, it is critical for the salesperson to know the product well and know how the product compares to those of competitors. 16-17 * * * STEP 1: PROSPECT AND QUALIFY PROSPECTING involves researching potential buyers and choosing those most likely to buy. QUALIFYING

is making sure that people have the NEED for a product, the AUTHORITY to buy, and the WILLINGNESS to listen to a sales message. A person who meets these criteria is the PROSPECT. The best prospects are people recommended by existing customers. 16-18 * * * STEP 2: PREAPPROACH Before making a sales call, sales representatives must do further RESEARCH to learn as much as possible about customers and their wants and needs. All this information should be in a DATABASE. Gathering information before the sale takes place is critical. STEP 3: APPROACH You dont have a second chance to make a FIRST IMPRESSION. The approach should give an impression of friendly professionalism to create rapport, to build credibility, and to start a relationship. 16-19

* * * . STEP 4: MAKE PRESENTATION The idea is to match the benefits of your value package to the clients needs. CRM software provides technical tools to tailor the presentation. This is a good time to use TESTIMONIALS. STEP 5: ANSWER OBJECTIONS A salesperson should ANTICIPATE POTENTIAL OBJECTIONS and determine proper responses. Questions should be viewed as opportunities for creating better relationships. 16-20 * * * STEP 6: CLOSE SALE

The TRIAL CLOSE is a step in the selling process that consists of a question or statement that moves the selling process toward the actual close. The final step is to ASK FOR THE ORDER. Salespeople must close many times before a long-term relationship is established. 16-21 * * * STEP 7: FOLLOW UP The selling process isnt over until the order is approved and the customer is happy. Selling goes beyond simply salesit includes ESTABLISHING RELATIONSHIPS, not just selling goods and services. FOLLOW-UP includes handling customer complaints, making sure that the customers questions are answered, and supplying what the customer wants. Often, customer SERVICE is as important to the sale as the product itself.

The SELLING PROCESS VARIES somewhat among different goods and services, but the general idea is the same. The goal is to help the buyer buy and make sure the buyer is satisfied after the sale. SALES FORCE AUTOMATION (SFA) includes software programs that help salespeople design products, close deals, tap into intranets, and more. 16-22 * * * Steps in the Selling Process (B2B) 1. 2. 3. 4. 5. 6. 7.

Prospect and Qualify Preapproach Approach Make Presentation Answer Objections Close Sale Follow Up 16-23 * * * THE BUSINESS-TO-CONSUMER (B2C) SALES PROCESS B2C selling differs from B2B selling. In B2C SALES, the salesperson does not have to do as much prospecting or qualifying. Retail salespeople dont usually have to go through a preapproach step. The first formal step in the B2C process is the APPROACH. Dont say May I help you; instead What can I help you with? After the initial approach, a salesperson then

MAKES A PRESENTATION to show customers how the companys products meet their needs. 16-24 * * * Steps in the Selling Process (B2C) Follow up Close sale Make presentation Start Ask questions Approach 16-25 * * *

Next, answer customers questions to help them choose the products that are right for them. In B2C selling, it is important to make a TRIAL CLOSE, walking a fine line between being helpful and being pushy. AFTER-SALE FOLLOW-UP is an important but often neglected step in B2C sales. IV. PUBLIC RELATIONS: BUILDING RELATIONSHIPS WITH ALL PUBLICS Learning goal 4 16-26 * * * PUBLIC RELATIONS (PR) is the management function that evaluates public attitudes, changes policies and procedures in response to the publics requests, and executes a program of action and information to earn public understanding and acceptance. A GOOD PUBLIC RELATIONS PROGRAM HAS THREE STEPS:

LISTEN TO THE PUBLIC: start with good marketing research. CHANGE POLICIES AND PROCEDURES: listen to what customers want. INFORM PEOPLE that youre being responsive to their needs. The public relations department has responsibility for MAINTAINING CLOSE RELATIONSHIPS with the media, community leaders, government officials, and other stakeholders. 16-27 * * * PUBLICITY: THE TALKING ARM OF PR PUBLICITY is any information about an individual, product, or an organization that is distributed to the public through the media, and thats not paid for or controlled by the sponsor. PRESS RELEASES must be carefully written so the media will publish them.

Publicity works only if the media finds the material interesting or newsworthy. 16-28 * * * ADVANTAGES OF PUBLICITY: Publicity is FREE. Publicity may reach people who wouldnt read an ad The greatest advantage of publicity may be its BELIEVABILITY. DISADVANTAGES OF PUBLICITY include: Marketers HAVE NO CONTROL over how, when, or if the media will use the story. Media DOES NOT HAVE TO PUBLISH IT. The story can be ALTERED so its not positive. There GOOD PUBLICITY and there is BAD PUBLICITY. Stories are NOT LIKELY TO BE REPEATED; advertising can be repeated as often as needed. To see that publicity is handled well by the media, the marketer should establish a

FRIENDLY RELATIONSHIP WITH THE MEDIA and cooperate with them. 16-29 * * * Public Relations Steps Publicity Listen to the public. Free Change policies and procedures.

More Effective Than Advertising Inform people that youre being responsive to their needs. Believable No Control No Repetition 16-30 * * * Sales Promotion Internal & External Sampling

Word-Of-Mouth Viral Marketing/Swag Blogging Podcasting 16-31 * * * SALES PROMOTION is the promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities. Examples of consumer sales promotions include free samples, cents-off coupons, and prizes. Sales promotion programs are designed to SUPPLEMENT personal selling, advertising, and public relations by creating enthusiasm for the overall promotional program. INTERNAL SALES PROMOTIONS (within company) generate employee enthusiasm about a product, including: Sales training Development of sales aids such as flip charts, portable audiovisual

displays, and videotapes Participation in trade shows to PROMOTE TO FINAL CONSUMERS 16-32 * * * EXTERNAL SALES PROMOTION (outside company, including distributors and dealers): It is important to get distributors and dealers involved so they, too, are enthusiastic. Trade shows are important because buyers are able to see products from many different sellers. Virtual trade showstrade shows on the Internetenable buyers to see many products without leaving the office. The next step is to PROMOTE TO FINAL CONSUMERS 16-33 * *

* Techniques include samples, coupons, cents-off deals, displays, contests, rebates, and so on. Sales promotion is an ongoing effort to maintain enthusiasm. SAMPLING is a promotional tool in which a company lets consumers have a small sample of a product for no charge. Using sampling in GROCERY STORES is a quick, effective way of demonstrating a products superiority at the time consumers are making a purchase decision. Companies use sampling in conjunction with other techniques such as EVENT MARKETING. The text uses the example of Pepsis introduction of Fruit Works. WORD-OF-MOUTH is one of the most effective promotional tools. WORD OF MOUTH PROMOTION is a promotional tool that involves people telling other people about products they have purchased. Anything that encourages people to talk favorably about an organization is effective word of mouth. Clever commercials and samples can generate word of mouth. VIRAL MARKETING AND OTHER WORD-OF-MOUTH STRATEGIES

16-34 * * * Some companies have begun creating word-of-mouth by paying people to go online and hype the product in chat rooms. These people get free tickets, T-shirts, and other merchandise that the industry calls SWAG. VIRAL MARKETING is the term now used to describe everything from paying people to say positive things on the Internet to setting up multilevel selling schemes whereby consumers get commissions for directing friends to specific Web sites. An effective strategy for spreading word of mouth is to send TESTIMONIALS to current customers. These are effective in confirming customers belief that they chose the right company and are effective in promotion to new customers. But negative word of mouth can hurt a firm. Upset customers are now publishing their complaints on the Internet. 16-35

* * * BLOGGING A BLOG is an online diary (Web log) that looks like a web page but is easier to create and update by posting text, photos, or links to other sites. There are over 9 million blogs currently on the Internet. Business information will be revolutionized by bloggers. 16-36 * * * SOME EXAMPLES: SmallBusinesses.blogspot.com (for small business trends.) CoolBusinessideas.blogspot.com (for cool business ideas.) PODCASTING PODCASTING is a means of distributing audio and video programs via the Internet that lets users subscribe to a number of files, also known as feeds, and

then hear or view the material at the time they choose. The name is a combination of iPod and broadcasting. Podcasting gives broadcast radio or television programs a new distribution method. TRADITIONAL PROMOTIONAL methods are slowly but surely being replaced by new technology. HOW NEW TECHNOLOGIES ARE AFFECTING PROMOTION As people purchase goods and services on the Internet, companies keep track of these purchases and GATHER FACTS about these customers. Using this information companies are able to design catalogs and brochures specifically to MEET INDIVIDUAL CUSTOMER NEEDS. Companies are spending more on direct 16-37 * * * MANAGING THE PROMOTION MIX: PUTTING IT ALL TOGETHER Learning goal 6 Each target group calls for a separate promotion mix. Large, homogenous groups of consumers are most efficiently reached through ADVERTISING.

Large organizations are best reached through PERSONAL SELLING. SALES PROMOTION motivates people to buy now rather than later. PUBLICITY adds support to the other efforts and can create a good impression. WORD OF MOUTH is often the most powerful promotional tool; often including blogs and podcasting. 16-38 * * * Objectives of Integrated Marketing Build Brand Equity Provide Information Manage Demand & Build Sales Differentiate Products Influence Perceptions, Attitudes, & Buyer Behavior 16-39

* * * In a PUSH STRATEGY, the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailer to stock and sell merchandise. In a PULL STRATEGY, heavy advertising and sales promotion efforts are directed toward consumers so they will request the products from retailers. A company can use BOTH push and pull strategies at the same time. The latest in pull and push strategies are being conducted on the INTERNET. It is important to make promotion part of a TOTAL SYSTEMS APPROACH to marketing. Thus, promotion would be an integral part of supply chain efforts. The idea would be to develop a TOTAL PRODUCT OFFER to appeal to everyone: manufacturers, distributors, retailers, and consumers. 16-40

* * * Centurys Top Ad Jingles You deserve a break today Be all you can be Pepsi-Cola hits the spot Mm Mm good! See the USA in your Chevrolet Source: Advertising Age I wish I were an Oscar Mayer wiener A little dabll do ya Double your pleasure,

double your fun Its the real thing Winston tastes good like a cigarette should 16-41 * * * Do Blatantly Sexy Ads Turn You Off? Percent Men 80 70 60 50 40 30 20

10 0 72 51 45 4 24 Strongly/Somewhat Agree Source: USA Today Women Strongly/Somewhat Disagree 4

Don't Know 16-42 * * * Total Direct Advertising Expenditures 300 263.7 231.4 250 200 150 271 142.1

153 1996 1997 164.1 100 50 0 Source: The Direct Marketing Association, Advertising Age (accessed August 10, 2006) 1998 2002 2004 2005 16-43

* * * Money Spent to Place Products $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 $4.1 $3.4 $2.5 $2.0 In Billions

2001 Source: PQ Media $2.1 2002 2003 2004 2005 16-44 * * * Total Advertising Expenditures By Media Network TV

$18,036 Magazine $9,527 Cable TV network $8,912 Local Newspaper $6,499 Spot TV $5,328 Internet $2,652 Syndicated TV

$2,623 $0 Source: Advertising Age, 2005 $5,000 Expenditures of 100 Leading National Advertisers $10,000 $15,000 $20,000 16-45 * * * Ad Spending Growth

Outdoor Cable TV Network Internet Sunday Magazine Local Magazine 0.0% Source: Advertising Age, 2005 9.8% 11.0% 13.3% 13.7% 25.2% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 16-46 * * * Infomercials Grossing Over 1 Billion Ron Popeil's

Rotisserie & BBQ In Billions George Foreman Grill Soloflex Total Gym Bowflex Proactiv 0 Source: Business 2.0, June 2005 0.5 1 1.5 2 2.5

16-47 * * * U.S. Online Ad Spending 9 8 7 6 5 4 3 2 1 0 1998 1999

Source: Investors.com; Advertising Age, 2005 2000 2001 2002 2003 2004 2005 16-48 * * * Sales Promotion Techniques B2B

Trade Shows Portfolios Deals Catalogs Conventions B2C

Coupons Cents-off Promotions Sampling Premiums Sweepstakes Contests Bonuses Catalogs Demonstrations Special Events Lotteries In-store Displays 16-49 * * * Tips on Issuing Coupons Coupons can be used as a Thank you for

buying or a Stop and try us. The value must be enough to attract customers. Use coupon promotions sparingly. Get professional help to get maximum exposure. Color-code your coupons for different groups that use them. 16-50 * * * Coupon Statistics Average Face Value 93 cents (2004); 46 cents (1990) Amount saved in 2004 $2.9 billion Number of coupons redeemed in America in 2004 3 billion

Coupons rank 2nd as purchase motivators (Largest: Free Samples) Source: St. Louis Post-Dispatch Everyday, July 2005 16-51 * * * Putting it all Together Convince wholesalers and retailers to stock and sell Producer uses advertising, personal selling, sales promotion to convince the intermediaries Idea is to push the product through the distribution system to the stores

Heavy advertisements and sales promotion efforts Directed at consumers so that they will request the products from retailers Products are pulled down through the distribution system 16-52

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