marketing exam 4

reasons for the increase in sales promotion

reasons for the increase in sales promotion

• growing power of retailers

• declining brand loyalty

• increased promotional sensitivity

• brand proliferation

• short-term focus

• increased accountability

• competition

• growth of digital marketing

brand proliferation

occurs when a large company acquires or absorbs multiple smaller brands in similar market areas

trade oriented sales promotions

promotions directed to intermediaries in the marketing channel such as wholesalers, retailers, or distributors

trade oriented sales promotions objectives

• obtain distribution for new products

• maintain trade support for established brands

• encourage retailers to display established brands

• build retail inventories

types of trade oriented sales promotions

• contest and incentives

• trade allowances

• display and point of purchase materials

• sales training programs

• trade shows

consumer oriented sales promotions

provides the customer with an immediate inducement to purchase a product

types of consumer oriented sales promotions

• sampling

• premiums

• contest and sweepstakes

• refunds and rebates

• bonus packs

• price off deals

• loyalty programs

• event marketing

free standing inserts (FSIs)

advertising booklet that contains consumer packaged-goods coupons offers

how is free standing inserts devilered

delivered with newspapers (usually in sunday editions) and also via direct mail

purpose of free standing inserts

efficient and affordable

sampling

giving some quantity of a product for no charge to indue trail

• ex: door to door

couponing

oldest and most widely used sales promotion tool

• ex: freestanding inserts

premiums

offer of an item of merchandise or service either free or at a low price

• ex: free and self liquidating premiums

contest

consumers compete for prizes or money on basis of skills or ability

sweepstakes

promotion where winners are determined purely by chances

• ex: games

refunds and rebates

offers by manufacturer to return a portion of purchase price

bonus packs

offer consumer extra amount of product at regular price by providing larger containers or extra units

price off deals

reduces price of the brand, offered on the package through specially marked price packs

loyalty programs

opportunity to accumulate points for continuing to purchase specific brands

• ex: discounts, gifts, prizes, free items

event marketing

promotion that links company or brands to an event, promotions where a themed activity is developed to create experiences for consumers and promote product or service

• ex: event sponsorship

contest and incentives

stimulate greater selling effort and support from reseller management or sales

• ex: push money (pm)`

trade allowances

deal offered to encourage resellers to stock, promote, or display manufactures products

• ex: buying, promotional, and slotting allowances

displays and point or purchase materials

many consumers make purchase decisions in the store

• ex: planograms

sales training programs

for sales people to provide consumers with information about features, benefits, and advantages

• ex: training classes, detailed manuals, product brochures, reference manuals and DVDs

trade shows

forum where manufactures can display products to current and prospective buyers

• ex: new products, generate leads, develop and maintain relationships

failure fees

fee changed to cover cost associated with stocking maintaining inventories and then pulling product

sales promotion trap

If you consistently run promotions, your consumers may come to expect them and only buy products or services when they're on promotion

problems with contest and incentives

can cause conflict between retail sales personnel and management

purpose of loyalty programs

encourage consumers to use products or services on continual basis

how do hobbyists/professionals impact coupons, contest and sweepstakese?

• presence of professional entrants defeats purpose of promotion

• coupon usage remained high after recent recession - extreme couponing

product types that work best for sampling

• products are of relatively low unit value, so 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 consumer can soon purchase again

sampling pros

• provides consumers risk-fee way to try new products

• generates much higher trail rates than other sales promotion techniques

• consumers experience the brand directly

sampling cons

• brand must have unique or superior benefits

• cost can be recovered only if consumers become regular users

• may require larger amounts of product to produce favorable results

couponing pros

• appeals to price sensitive customers

• does not require retailers cooperation

• reduces consumer’s perceived risk associated with trail of new brand

• encourages repeat purchase

• helps coax users to trade up to more expensive brands

couponing cons

• estimating how many consumers will use coupon and when is difficult

• less effective than sampling for inducing initial product trail in a short period

• consumers already using the brand can still use coupons

• low redemption rates and high costs

• could result in misredemption

refunds pros

• consumers are very responsive

• create new users

• encourage brand switching or repeat purchase behavior

• perceived price reduction for consumers who plan to redeem but don’t

• well promoted, high value rebate can increase sales significantly

refunds cons

• delay and effort to obtain savings is a deterrent

• rebates perceived 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

bonus packs pros

• direct way to provide extra value

• strong impact on purchase decision att time of purchase

• effective defense against competitor’s promotion or new brand

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

bonus packs cons

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

• appeal primarily only to current users and promotion sensitive consumers

price off deals pros

• ensure discounts reach consumers

• present a readily apparent value to shoppers

• encourage consumers to purchase larger quantities

price off deals cons

• can create pricing and inventory problems

• appeal primarily to regular users, not new users

• much adhere to regulations set by federal trade commission

loyalty programs pros

• encourage consumers to use products or services on continual basis

• develop strong customer loyalty

• help develop customer databases

loyalty programs cons

• consumers drop out as it takes too long to accumulate reward points

• many require smartphone apps

public relations

The management function that evaluates public attitudes, identifies the policies and procedures of an organization with the public interest, and executes a program of action to earn public understanding and acceptance.

traditional role of PR

• maintain mutually beneficial relationships between the organization and its publics

• act as a marketing communications function

new role of PR

• work together with marketing department

• contribute to IMC process that is consistent with marketing goals

publicity

generation of news about a person, product, or service that appears in broadcast or print media

corporate advertising

advertising that describes a company, rather than its products, and that is intended to show the company in a positive way to the public

marketing public relations advantages

• it is a cost effective way to reach the market

• it is a highly targeted way to conduct public relations

• it benefits from the endorsement of independent and objective third parties who have no association with the product

• it achieves credibility

• it supports advertising programs by making messages more credible

• it breaks through the clutter

• it circumvents consumer resistance to sales efforts

• there can be improved media involvement among consumers

• it can create influence among opinion leaders and trendsetters

• it can improve ROI

marketing public relations cons

• there is a lack of control over the media

• it is difficult to tie in slogans and other advertising devices

• media time and space are not guaranteed

• there are no standard effectiveness measures

internal audiences

people who are connected to a firm with whom the firm communicates on a routine basis

examples of internal audiences

• employees of the firm

• stockholders and investor

• community members

• suppliers and customers

external audiences

people who are not closely connected with the organization

examples of external audiences

• media

• educators

• civic and business organizations

• governments

• financial groups

tools of PR: press release

statement provided to the media

• must be factual, true, and of interest to the medium and its audience

tools of PR: press conferences

delivering information by interacting directly with media

tools of PR: exclusives

offering one medium exclusive rights to the story

tools of PR: interviews

interactions involving a spokesperson answering questions directed toward him or her

tools of PR: community involvement

supporting and contributing to a community

tools of PR: internet

disseminate information electronically

tools of PR: social networks and blogs

online social platforms

• digital public relations: intersection between traditional public relations actives and new digital marketing functions

how does publicity differ from public relations

• being a short term strategy

• not always being positive

• not always being controlled or paid by the organization

video news release (VNR)

• publicity piece produced by publicists so stations air it as a new story

• marketers have control over time and place where information is released

advantages of publicity

• substantial credibility

• news value

• significant word of mouth

• perception of media endorsement

disadvantages of publicity

• lack of control

• timing

• accuracy

advocacy advertising

• spreading ideas and explaining controversial social issue of public importance

• indirectly support sponsor’s interests

• issue ads: sponsored by organization to bring attention to what they consider to be an important issue

advantages of corporate advertising

• excellent vehicle for positioning the firm

• takes advantage of benefits derived from public relations

• reaches a selected target market

disadvantages of corporate advertising

• questionable effectiveness

• raises questions of constitutionality and ethics

cause related advertising

• linking with nonprofit organizations as contributing sponsors

• takes time and effort to be successful

image advertising

• promotes organizations overall image

• methods:

  • general image or positioning ads

  • sponsorships

  • recruiting

  • generating financial support

event sponsorships

• sponsoring specific events or causes as part of a marketing strategy

• builds equity and gains affinity with target audiences

characteristics of economic environment

• stage of economic development

• economic infrastructure

• standard of living

• per capita income

• distribution of wealth

• currency stability

• exchange rates

characteristics of cultural environment

• language

• lifestyles

• values

• norms and customs

• ethics and moral standards

• taboos

demographic environment consists of what?

• size of population

• number of households

• household size

• age distribution

• occupation distribution

• education levels

• employment rate

• income levels

why companies go global

• limited opportunities for expansion in domestic market

• economies of scale

• growth and profit opportunities

• economic necessity

• balance of trade deficit

ethnocentrism

culture stresses buying and using products from its home country; discourages supporting other countries products

standardized/global strategy

allows for a cohesive brand image across different markets

localized strategy

a unique market approach a company takes to address purchasing habits, customer behaviors and overall cultural differences in each country it works in

organizing for international advertising

• centralization at home office headquarters

• decentralization of decision making to local foreign markets

• combination of the two

  • allows for consistency in company’s international advertising

  • permits local input and adaptation of the promotion program

centralization at home office headquarters

protest foreign investments and control marketing effort and brand image

decentralization of decision making to local foreign markets

local managers know the marketing situation in their countries

international media selection

• has multi market coverage

• primary focus has been magazines and newspapers

international sales promotions

• economic development

• market maturity

• consumer perceptions

• trade structure

• legal restrictions and regulations

pattern advertising

ads follow basic approach, but themes, copy and visual elements adapted to differences in local markets

when is globalization appropriate?

• brands or messages adapted for visual appeal

  • emotions such as joy, sentiment, excitement, pleasure

• brands promoted with image campaigns that play to universal needs, values and emotions

  • jewelry, cosmetics, liquor, cigarettes

• high tech and new products not steeped in cultural heritage

  • smart phones, personal computers, HDTV sets, video games, fitness trackers

• products with nationalistic flavor if country has a reputation

  • country of origin effect

  • in global world, product origin may not be as relevant

• products with universally similar tastes, interests, needs and values

  • wealthy (luxury products) teenagers

purpose of self regulation

way to limit government interference

better business bureau (BBB)

promotes fair advertising and selling practices across industries at local level

federal trade commission (FTC)

regulates advertising at federal level and determines whether it is truthful or deceptive

federal communications commission (FCC)

• regulates broadcast communication

• enforces laws governing the airing of offensive, indecent, and profane material

• involved in issues affecting publicity and public relations

• considering regulating use of product placements in television shows

the food and drug administration (FDA)

• has authority over the labeling, packaging, branding, ingredient listing, and advertising of:

  • packaged foods

  • drug products

  • cosmetics

• requires caution and warning labels on potentially hazardous products

• can seize products on charges of false and misleading advertising

• polices health-related claims and labeling on food products

• regulates advertising and promotion of tobacco products

the U.S. postal service (USPS)

controls deceptive advertising by direct response advertisers

bureau of alcohol, tobacco, firearms and explosives (ATF)

• regulates and collects tax for the liquor industry

• regulates and controls advertising of alcoholic beverages through federal alcohol administrate

frist amendment

• protects commercials speech

• freedom of expression must be balanced against commercial speech

commercial speech

speech that promotes commercial transaction

central hudson test

determines restrictions on commercial speech

wheeler-lea amendment

empowered FTC to act if there was evidence of injury to the public

• issue cease and desist orders and levy fines on violators

• extended jurisdiction

how to determine unfairness on basis of trade practice that:

• causes substantial physical or economic injury to consumers

• could not reasonably be avoided by consumers

• must not be outweighed by countervailing benefits to consumers or competition

deceptive advertising

advertising that is untrue or may mislead the consumer

• puffery

• deception

puffery

advertising that praises item with subjective opinions, superlatives, or exaggerations, and states no specific facts

• ex: papa johns vs. domino

advertising substantiation

requires advertisers to substantiate their claims before ad appears