Ch. 16 : The Last "P"
Ch. 16 : The Last "P" MKTG 3650
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Date Created: 05/09/16
MKTG 3650 Foundations of Marketing Practice Ch. 16 An Introduction to Marketing Communications The Last “P” The Role Promotion Plays as Part of the Marketing Mix Advertising o Is any form of communication that is conveyed via a “nonpersonal medium,” meaning a medium that does not employ personal facetoface contact, and is paid for by some sponsor. Personal selling o Is an oral, oneonone, often facetoface communication between prospective buyers and sellers. o Primary purpose is to “close” sales Sales Promotion o Supports and augments advertising and personal selling efforts. o Consists of activities that provide shortterm incentives aimed at inducing desired responses from customers, the Firm’s salespersons, and supply chain intermediaries. Publicity and Public Relations o Any message about a product, organization, person, or event that is communicated via nonpersonal media and is not paid for by a sponsor Characteristics of the Product Type of Product and its Unit Value o Advertising is employed primarily through a “pull strategy” for the dual purposes of creating brand awareness and differentiating the brand from competitive offerings. o Personal selling is used primarily to influence intermediaries to stock the product and to support the efforts of these middlemen o For expensive products Personal selling Service Requirements o Consumer products that must be customized rely heavily on salespeople to communicate the product’s benefits and bundle the proper package to satisfy customers’ specific needs Amount and Complexity of Information Communicated o When messages are complex or when products benefits must be extensively demonstrated, personal selling is more appropriate. Stage in the Product Life Cycle o During introduction, the Firm’s main promotion objectives are to generate primary demand for the product category by informing consumers of the product’s existence. o The overarching communication purposes are to introduce and highlight the product’s benefits and stimulate trial. Advertising is used extensively during this stage to create awareness and stimulate product trial. Sales promotions, such as coupons and free samples, are employed to induce trial Personal selling is employed to reach intermediaries and persuade them to stock and promote the product. o During the growth stage, as competitors enter the market, promotion objectives shift to building selective demand by differentiating the brand from competitive brands Ads should communicate brand superiority by promoting the brand’s differentiating characteristics relative to competing brands. Comparative advertising in which competing brands are directly referenced in ads is often employed in beginning of the growth stage. Less emphasis is placed on sales promotions during the growth stages. Sales promotions’ incentivizing values are typically not necessary at this point because of the product’s increasing acceptance and the growing market. Personal selling is still essential for reaching supply chain intermediaries. Existing supply chain partners should be nurtured and supported, and new relationships developed to foster continued growth. o The maturity stage of the PLC is the most expensive from a promotion standpoint. The promotional focus remains on fostering selective demand for the brand but the communication effort is intensified Now, ads generally predominate within the promotion mix. New ad campaigns may be required to announce product improvements, reach additional target segments, and demonstrate new ways that consumers could use the product. Ads main objectives continue to focus on differentiating the brand. The purpose is to “buy market share” from competitors. The primary reason to use sales promotions at this point is to tempt consumers into “brand switching.” Coupons, pointofsale devices, premiums, and price incentives are needed to entice consumers away from competing brands. o During the decline stage, promotional efforts are generally lowered in an effort to “harvest” remaining profits from the nowold brand. Promotions are usually pruned to cut costs and increase profit margins. Characteristics of the Target Market Type of Customer o Ultimate—or final—consumers are typically reached via ads and sales promotions. A “pull” promotion strategy tends to predominate in order to create demand for consumers for products. o Personal selling, sales promotions, and trade advertising are employed to reach intermediaries. The primary objective is to convince intermediaries to stock products or to emphasize their sales. Type of Buying Decision o When consumers engage in highinvolvement, extensive decision making, promotional mixes must b structured to provide consumers with ample info related to the product’s characteristics, brand performance, availability, and price. o Consumers engaged in low involvement decisions are much less receptive to information. Little active info search and alternative evaluation occurs with low involvement decisions. Influencing Factors within the Firm Supporting Marketing Mix Strategies o The emphasis placed on alternative promotion tools depends on the level of synergy sought with other elements of the Firm’s marketing mix. o Manufacturers often rely heavily on intermediaries to support their efforts. o “Push promotion strategies” means producers heavily “promote” to wholesale and retail intermediaries. o A “pull promotion strategy” builds sales by promoting aggressively to the final buyer, usually the ultimate consumer. Branding Strategy o Firms that use different forms of family branding strategies, such as brand extension or cobranding, do so in part to obtain scale economies in promotion. o The meaning attached to the brand name held in common by the Firm’s various products stimulates “meaning transfer” from existing brands to any new products that may be introduced. Promotion Budget o The selection of elements of the promotion mix is highly dependent on the funds that are available for promotion activities. o Firms with limited resources are locked into employing less expensive promotional techniques such as Internet sites and social media, printed media such as flyers and brochures, specialty ads, direct mail, and phone book listings. Competitors’ Actions o The objective is usually to add, retain, or regain market share The Hierarchy of Communications Objectives Generating Customer Awareness o The objective of creating awareness is easier when distinct consumer wants and needs exist that are, essentially waiting to be satisfied. Structuring Brand Beliefs, Attitudes, and Differentiating the Brand o Additional customer knowledge must be imparted about product/brand characteristics, benefits, availability, prices, new values, etc. o Marketers should deliver the sort of knowledge that leads message recipients to perceive that the promoted product is “different from” and “better than” competing product options. o Brand images are developed from more than just information concerning the benefits and characteristics of the associated product. Image also implies a substantial affective or attitudinal component that is a function of the consumer’s exposure to and/or use of the product over a period of time. o Differentiating the brand from competing brands is an important promotion objective, especially during the late growth and maturity stages of the PLC. Creating, Liking, Preference, and Desire o Continuing to solidify customers’ beliefs and attitudes toward brands should walk these customers closer to trial and purchase. o At this stage, marketers are establishing the consumer’s “want.” Stimulating Trial and Purchase o Inducing trail is most easily accomplished for low involvement products via the use of coupons, free samples, displays, and other POS techniques. o Inducing trial for higher involvement products is more difficult because of the relatively high costs and inherent risk associated with the purchase and use of such products. Establishing Brand Conviction o Successfully inducing trial and purchase is essential for ultimate conviction to a brand. Positive rewards based on purchase and use of a brand positively reinforce the brand purchase decision, walking the consumer one step closer to conviction and brand loyalty. o Successful reminders, callstoaction, leads to the creation of brand equity, and brand loyalty. Other Communications Objectives Managing Demand o Promotion is employed to mage demand for products during all stages of the product life cycle, but of specific interest are the increasing use of “de marketing” and advertisers’ ongoing attempts to keep a product alive by increasing the amount and frequency with which a product is used. o Firms strive to increase the frequency and quantity of product purchases through advertising in the mass media and the generous use of sales promotions. Demarketing o When supplies are limited, products may need to be demarketed. Promotion is used to encourage consumers to purchase less, or at a later date. o Firms engage in demarketing to reduce the demand for products hat are subject to abuse. Managing Corporate Image o Firms make extensive use of the mass media, particularly TV and print, and social media to explain their actions to interested publics and to improve their corporate images. Influencing Intermediaries to Stock the Product o Firms rely heavily on the aggressive selling efforts of the producer’s sales force to work with wholesalers and/or retailers and employ a wide range of sales promotions directed at middlemen to influence them to stock the product and further motivate their selling efforts. Determining the Message’s Content, Source, and Format The message’s content or appeal is often nothing more than the key selling points or ideas that must be emphasized in the communication. Two basic types of appeals are commonly employed: o Rational appeals focus on communicating information about concrete benefits, functions, or characteristics that are associated with the product. o Emotional appeals attempt to elicit affective or emotional responses from target audiences. Humor, fear, and sex appeals are the most common emotional appeals. The source of the message is the apparent originator of the message. It could be a person, a company, or an inanimate figure, such as a cartoon character. Message format considerations focus on how best to structure the message to achieve the greatest impact. o Designing the message to attract and hold attention, enhance the likelihood of positive attitude formation or change. o Usual considerations include use of onesided vs. twosided arguments, use of comparative ads, or the order in which key message points are presented OneSided vs. Twosided messages o A onesided message only points out the product’s good points o Twosided message: Both sides of the argument are presented and the negative points are refuted Comparative Advertising When using comparative advertising, a Firm’s competitors are named. Comparative ads provide consumers with ore info and rational bases on which to choose one or another brand. Order of Presentation Attention and interest are enhanced when the strongest message points are presented first. Four Basic Communication Principles 1. For communication to actually occur, the “intended marketing message” must be received and understood by the “intended customer target” in the manner in which the originating or initiating marketing sender intended. 2. When communicating with customers, marketers should emphasize the products features, attributes, and benefits (FAB) that are viewed as most important to customers. 3. Whenever possible, marketers should emphasize features, attributes or benefits that meaningfully differ from those offered by competitors’ products. 4. Marketers will communicate better once they consciously choose to live in the real rather than some idea version of the world. Other Keys to Marketing Success Begin with the Ends in Mind o Marketing communications presumably should always deliver one or more of the following: remind, inform, or persuade o Reminders should remind targeted recipients why they once loved the marketing object of communication o Informative messages should create awareness of something new, special, different, or better that is happening now or available o To persuade in communications contexts, marketers should demonstrate, through carefully designed messages, how and why making the choice that they are advocating will help customers achieve their goals. Provide incentives, or something that inspires decision makers into action. Frame Messages and Choices Carefully o When communicating, marketers should frame the choices they present to actual or prospective customers as decisions that potentially lead to losses rather than gains, if the decider chooses poorly. Honor the “Cs” of Good Communication o When messaging, marketers usually should explain their product/brand and the core differentiating values it delivers as Clearly, Concisely, and Compellingly as possible o Clearly can be easily understood o Concisely features both soul and wit o Compelling deliver compelling value propositions More about WordofMouth and eWordofMouth WordofMouth entails informal persontoperson communication between a non marketing communicator and a customer about the ownership or characteristics of a brand, product, service, organization, or marketer. EWordofMouth entails any positive or negative accounts offered by potential, current, or former customers about products, brands, or marketing organizations through Internetmediated communication channels. Integrated Marketing Communication (IMC) First, accept environmental change as normal and permanent Second, adapt constantly in response to those everchanging environmental circumstances IMC o Was introduced in response to environmental and technological changes and the marketing communication challenges that those environmental and technological changes wrought. o Involves every department in the Firm becoming involved in developing and communicating messages to customers, channel members, other stakeholders, and publics to create a unified image of the organization and its products. o Lies in the twoway communications that are emphasized between the Firm and all relevant audiences o Is a communication process that was developed to ensure that all elements of a Firm’s marketing communications process that was developed to ensure that all elements of a Firm’s marketing communications are fully integrated with one another. Why IMC is important o The use of IMC allows marketers to “target and touch” the same segments from different angles. o The use of IMC ensures a higher probability that marketers will enjoy media continuity. IMC delivers o The use of IMC fundamentally requires that consistent brandrelated messaging be delivered across traditional and digital marketing communication channels. o Rather than simply using differing media to “tell and sell”, the IMC approach providers greater assurance that the respective strengths of each communication channel will be leveraged by the Firm to create more favorable communication outcomes than any channel would have achieved individually. o Trends From preferred use of traditional marketing to digital/interactive communications Greater use of mass media and social media From lowaccountability in the terms of effectiveness of communication expenditures to highaccountability in terms of communicationspend effectiveness From limited, oneway buyerseller connectivity to more pervasive, twoway connectivity Determining the IMC Budget Percentage of Sales Method o The budget is set at some fixed percentage of the previous year’s sales or next year’s forecasted sales. o Most commonly employed technique for its simplicity o Drawback is that expected sales drive the size of the promotion budget or anticipated sales revenue determines or causes promotion expenditures. Competitive Parity Method o When budgets are established with this method, the size of the budget is driven by how much one’s competitors are spending. All You Can Afford Method o The communications budget is equal to any money left over after all other expenditures have been met Objective and Task Method o Budgets are set by first identifying exactly what communications objectives are being pursued and then setting the budget to achieve them. Legal Constraints on Promotion Promotion Misinforms Consumers o Accused of misrepresenting the truth about a products benefits and characteristics Promotion is Unjustifiably Expensive Promotion Can Classically Condition Some Consumer Groups o Critics of beer, wine, and cigarette ads have claimed that ads for these products classically condition consumers into buying products that are ultimately harmful to both the consumer and the broader society. Federal Laws and the Federal Trade Commission o The Federal Trade Commission Act Prohibits unfair competitive practices. o The primary solutions are: Consent Decrees: Offending firms agrees to stop their deceptive claims Cease and Desist Orders: employed when ads refuse to engage in the consent decree. Forces Firms to remove offending communications from circulation Corrective Advertising: Offending Firm is forced to retract the false or misleading claims of which it is accused Fines: May stipulate that fines are paid to the government and/or those consumers who many have been harmed by claims made in the Firm’s ads o The RobinsonPatman Act Known for regulating pricing activities and limits Firms’ use of promotional allowances as they attempt to incentivize middlemen o The Lanham Trademark Act Grants Firms the opportunity to acquire trademark protection for their brands and brand identifiers. Firms exclusive rights to the use of words, names, symbols, and combinations of letters or numbers Other Federal Regulatory Agencies The Federal Communications Commission (FCC) o Cannot directly regulate a Firms’ promotional activities, but it does have jurisdiction over some media industries that may carry the Firm’s communications. o Can refuse to grant licenses and renewals in these industries that air programming that are counter to public interest The Food and Drug Administration o Labels claims must be Truthful not misleading Supported by legitimate, reliable research data that is publicly available Based on accepted medical and nutrition principles o Controls prescription drug products Bureau of Alcohol, Tobacco, and Firearms (BATF) o Regulates the advertising of alcohol, tobacco, and firearms indirectly due to its ability to superintend the production and distribution of these products The Internet: Mediator of Marketing Communication Every time newgeneration communication technologies are adopted, the consequences alter how consumers receive, process, and perceive information. Each newgeneration technology creates new markets for marketers to pursue and new communication channels through which to deliver messages
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