Marketing Quiz #3

Premiums

==> Build goodwill, ADVANTAGES: consumers like free or reduced-price merchandise, DISADVANTAGES: consumers buy for premium not product A promotional tool often used with consumers is the premium, which consists of merchandise offered free or at a significant savings over its retail price. This latter type of premium is called self-liquidating because the cost charged to the consumer covers the cost of the item. McDonald's, for example, used a free premium in a promotional partnership with 20th Century Fox during the release of the movie Epic. Collectible toys that portrayed movie characters were given away free with the purchase of a Happy Meal. What are the most popular premiums? According to the Promotional Products Association International, the top premiums are apparel, writing instruments, shopping bags, cups and mugs, and desk accessories. By offering a premium, companies encourage customers to return frequently or to use more of the product. Research suggests that deal-prone consumers and value seekers are attracted to premiums.57

Purchase Stage

==> PERSONAL SELLING HIS HIGHEST IN THIS STAGE At the purchase stage, the importance of personal selling is highest, whereas the impact of advertising is lowest. Sales promotion in the form of coupons, deals, point-of-purchase displays, and rebates can be very helpful in encouraging demand. In this stage, social media can play an important role in the final decision by delivering promotions and giving consumers control of the process. Research indicates that direct marketing activities shorten the time consumers take to adopt a product or service.17

Billboards

ADVATAGES: low cost, local market focus, high visibility, opportunity for repeat exposure DISADVANTAGES: message must be short and simple, low selectivity of audience, criticized as a traffic hazard. billboards, often results in good reach and frequency and has been shown to increase purchase rates.40 The visibility of this medium is good supplemental reinforcement for well-known products, and it is a relatively low-cost, flexible alternative. Also, a company can buy space in a specific, targeted geographical market. A disadvantage to billboards, however, is that no opportunity exists for lengthy advertising copy. Also, a good billboard site depends on traffic patterns and sight lines.

Promotional Elements

Advertising Personal Selling Public Relations Sales Promotion Direct Marketing

Advertising

Advertising is any PAID FORM OF NONPERSONAL COMMUNICATION (TV, Print, Radio) about an organization, product, service, or idea by an identified sponsor. The paid aspect of this definition is important because the space for the advertising message normally must be bought. An occasional exception is the public service announcement, where the advertising time or space is donated. A full-page, four-color ad in Time magazine, for example, costs $339,400. The nonpersonal component of advertising is also important. Advertising involves mass media (such as TV, radio, and magazines), which are nonpersonal and do not have an immediate feedback loop as does personal selling. So before the message is sent, marketing research plays a valuable role; for example, it determines that the target market will actually see the medium chosen and that the message will be understood. ==> Mass, fees paid for space and time, Strengths: efficient means for reaching large numbers of people Weaknesses: High absolute costs, difficult to receive good feedback

Direct marketing

Direct Communication with consumers to generate a response (Catalogs, Direct Mail, Online Marketing) ==> Customized, cost of communication through mail, telephone, or computer, STRENGTHS: Messages can be prepared quickly, facilitates relationship with customer WEAKNESSES: Declining customer response, database management is expensive direct marketing, uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet. The communication can take many forms, including face-to-face selling, direct mail, catalogs, telephone solicitations, direct response advertising (on television and radio and in print), and online marketing.13 Like personal selling, direct marketing often consists of interactive communication. It also has the advantage of being customized to match the needs of specific target markets. Messages can be developed and adapted quickly to facilitate one-to-one relationships with customers.

Newspaper ads

Falling circulation and Ad revenue Online and Mobile Editions new types of news organizations ADVANTAGES: Excellent coverage of local markets, ads can be placed and changed quckly, ads can be saved, quick consumer response, low cost DISADVANTAGES: Ads compete for attention with other newspaper features, short life span, poor color.

Product/Institution Ads

Focused on selling a good or service, PRODUCT ADDS take three forms: (1) pioneering (or informational), (2) competitive (or persuasive), and (3) reminder. Look at the ads for DIGIORNO®, Fidelity Investments, and Dove Chocolate to determine the type and objective of each ad. INSTITUTIONAL ADS: The objective of institutional advertisements is to build goodwill or an image for an organization rather than promote a specific good or service. Institutional advertising has been used by companies such as Texaco, Pfizer, and IBM to build confidence in the company name.6 Often this form of advertising is used to support the public relations plan or counter adverse publicity. Four alternative forms of institutional advertisements are often used:

Full Service

Full-service agency: Does research, selects media, develops copy, and produces artwork; also coordinates integrated campaigns with all marketing efforts The responsibility for actually carrying out the advertising program can be handled in one of three ways, as shown in Figure 18-5. The full-service agency provides the most complete range of services, including market research, media selection, copy development, artwork, and production. In the past, agencies that assisted a client by both developing and placing advertisements often charged a commission of 15 percent of the media costs. As corporations introduced integrated marketing communication approaches, however, many advertisers switched from paying commissions to incentive plans based on performance. These plans typically pay for agency costs and a 5 to 10 percent profit, plus bonuses if specific performance goals related to brand preference, lead generation, sales, and market share are met. The Association of National Advertisers estimates that 46 percent of all agency clients currently use this approach.

GRPs

Gross Rating Points (GPRs): number used by advertisers that is obtained by multiplying reach (expressed as a percentage of the total market) by frequency Is reference number advertisers use that is obtained by multiplying reach (expressed as a percentage of the total market) by frequency (RxF)

Public Relations

Indirect form of payment for publicity (News Story, Editorial, Product Announcement) ==> Mass, no direct payment to media, STRENGTHS: often most credible source in the consumer's mind WEAKNESSES: Difficult to get media cooperation Public relations is a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services.7 Many tools such as special events, lobbying efforts, annual reports, press conferences, social media (including Facebook and Twitter), and image management may be used by a public relations department, although publicity often plays the most important role.8 Publicity is a nonpersonal, indirectly paid presentation of an organization, product, or service. It can take the form of a news story, editorial, or product announcement. A difference between publicity and both advertising and personal selling is the "indirectly paid" dimension. With publicity a company does not pay for space in a mass medium (such as television or radio) but attempts to get the medium to run a favorable story on the company. In this sense, there is an indirect payment for publicity in that a company must support a public relations staff. An advantage of publicity is credibility. When you read a favorable story about a company's product (such as a glowing restaurant review), there is a tendency to believe it. Travelers throughout the world have relied on Frommer's guides such as Frommer's France

Reminder

Is used to reinforce previous knowledge of a product a type of product add that: Reminder advertising is used to reinforce previous knowledge of a product. The Dove Promises® ad reminds consumers about a special event, in this case, Valentine's Day. Reminder advertising is good for products that have achieved a well-recognized position and are in the mature phase of their product life cycle

Growth Stage

OBJECTIVE: To Persuade ACTIVITIES: Personal Selling to Intermediaries, Advertising to differentiate The primary promotional objective of the growth stage is to persuade the consumer to buy the product rather than substitutes, so the marketing manager seeks to gain brand preference and solidify distribution. Sales promotion assumes less importance in this stage, and publicity is not a factor because it depends on novelty of the product. The primary promotional element is advertising, which stresses brand differences. Personal selling is used to solidify the channel of distribution. For consumer products such as dog food, the salesforce calls on the wholesalers and retailers in hopes of increasing inventory levels and gaining shelf space. For business products, the salesforce often tries to get contractual arrangements to be the sole source of supply for the buyer.

Push/Pull Strategy

PUSH: push strategy, directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product. In this approach, personal selling and sales promotions play major roles. Salespeople call on wholesalers to encourage orders and provide sales assistance. Sales promotions, such as case discount allowances (20 percent off the regular case price), are offered to stimulate demand. By PUSHING THE PRODUCT through the channel, the goal is to get channel members to push it to their customers. Ex: Ford Motor Company, for example, provides support and incentives for its 3,290 Ford dealers. Through a multilevel program, Ford provides incentives to reward dealers for meeting sales goals. Dealers receive an incentive when they are near a goal, another when they reach a goal, and an even larger one if they exceed sales projections. Ford also offers some dealers special incentives for maintaining superior facilities or improving customer service. All of these actions are intended to encourage Ford dealers to "push" the Ford products through the channel to consumers PULL: In some instances, manufacturers face resistance from channel members who do not want to order a new product or increase inventory levels of an existing brand. As shown in Figure 17-5B, a manufacturer may then elect to implement a pull strategy by directing its promotional mix at ultimate consumers to encourage them to ask the retailer for a product. Seeing demand from ultimate consumers, retailers order the product from wholesalers and thus the item is pulled through the intermediaries. Pharmaceutical companies, for example, now spend more than $3.4 billion annually on direct-to-consumer prescription drug advertising, to complement traditional personal selling and free samples directed only at doctors.21 The strategy is designed to encourage consumers to ask their doctor for a specific drug by name—pulling it through the channel. Successful campaigns such as the print ad which says, "Ask your doctor if Zetia is right for you," can have dramatic effects on the sales of a product.

Competitive (or persuasive)

Promote a specific brand's features and benefits. a type of product add that: Advertising that promotes a specific brand's features and benefits is competitive. The objective of these messages is to persuade the target market to select the firm's brand rather than that of a competitor. An increasingly common form of competitive advertising is comparative advertising, which shows one brand's strengths relative to those of competitors.3 The Fidelity ad, for example, highlights the competitive advantages of Fidelity's online trading service compared to Schwab, E*TRADE, and TD Ameritrade. Studies indicate that comparative ads attract more attention and increase the perceived quality of the advertiser's brand although their impact may vary by product type, message content, and audience gender.4 Firms that use comparative advertising need market research to provide legal support for their claims.

Competitive Institutional

Promote the advantages of one product class over another. a type of institutional ad that: Competitive institutional advertisements promote the advantages of one product class over another and are used in markets where different product classes compete for the same buyers. America's milk processors and dairy farmers use their "Got Milk?" campaign, shown on the next page, to increase demand for milk as it competes against other beverages.

Sales Promotion

Short term inducement of value used to get a quick burst of sales (Coupons, sweepstakes, contests) ==> Mass, Wide range of fees paid, depending on promotion selected, STRENGTHS: effective at changing behavior in short run, very flexible WEAKNESSES: easily abused, can lead to promotion wars, easily duplicated Coupons, rebates, samples, contests, and sweepstakes such as the M&M's promotion are just a few examples of sales promotions discussed later in this chapter. The advantage of sales promotion is that the short-term nature of these programs (such as a coupon or sweepstakes with an expiration date) often stimulates sales for their duration. Offering value to the consumer in terms of a cents-off coupon or rebate may increase store traffic from consumers who are not store-loyal.11 Sales promotions cannot be the sole basis for a campaign because gains are often temporary and sales drop off when the deal ends. Advertising support is needed to convert the customer who tried the product because of a sales promotion into a long-term buyer. If sales promotions are conducted continuously, they lose their effectiveness. Customers begin to delay purchase until a coupon is offered, or they question the product's value.

Advocacy Institutional

States the position of a company on an issue a type of institutional ad that: Advocacy advertisements state the position of a company on an issue. Chevron's "We Agree" campaign places ads stating its position on issues such as renewable energy, protecting the planet, and community development. Another form of advocacy advertisement is used when organizations make a request related to a particular action or behavior, such as a request by the American Red Cross for blood donations.

Pioneering (informational)

Tells people what a product is, what it can do, and where it can be found a type of product add that: Used in the introductory stage of the product life cycle, pioneering advertisements tell people what a product is, what it can do, and where it can be found. The key objective of a pioneering advertisement (such as the ad for DIGIORNO® PIZZERIA!TM pizza) is to inform the target market. Informational ads, particularly those with specific message content, have been found to be interesting, convincing, and effective

Personal Selling

Two-way (generally face-to-face) flow of communication between buyer and seller. ==> Customized, Fees paid to salespeople as either salaries or commissions, STRENGTHS: immediate feedback, very persuasive, can select audience, can give complex information WEAKNESSES: Extremely expensive per exposure, messages may differ between salespeople personal selling, which is the two-way flow of communication between a buyer and seller designed to influence a person's or group's purchase decision. Unlike advertising, personal selling is usually face-to-face communication between the sender and receiver. Why do companies use personal selling? There are important advantages to personal selling, as summarized in Figure 17-2. A salesperson can control to whom the presentation is made, reducing the amount of wasted coverage, or communication with consumers who are not in the target audience. The personal component of selling has another advantage in that the seller can see or hear the potential buyer's reaction to the message. If the feedback is unfavorable, the salesperson can modify the message.

Pioneering Institutional

What a product is, what it can do, and where it's found a type of institutional ad that: Pioneering institutional advertisements, like the pioneering ads for products discussed earlier, are used for announcements about what a company is, what it can do, or where it is located. Recent Bayer ads stating, "We cure more headaches than you think," are intended to inform consumers that the company produces many products in addition to aspirin. Bridgestone uses pioneering institutional ads in its "One Team. One Planet" campaign to inform people about its rubber tree farms, tire recycling, and environmentally friendly factories.

Reminder Institutional

bring the company's name to the attention of the target market again. a type of institutional ad that: Reminder institutional advertisements, like reminder ads for products, simply bring the company's name to the attention of the target market again. The Army branch of the U.S. military sponsors a campaign to remind potential recruits of the opportunities available in the Army.