HADM 3760-10 Hospitality Marketing

Jack Morris, Spring 2016

CHAPTER 14
Promoting Products: Public Relations and Sales Promotion
CHAPTER OVERVIEW
This chapter starts with a discussion of the five different public relations activities: press relations,
product publicity, corporate communication, lobbying, and counseling. Next, the corporate image is
discussed. An overview of the public relations process will be presented, followed by an overview of
the major tools used in public relations. Finally, the last section is a review of sales promotion.
CHAPTER OUTLINE
I. Public Relations is the process by which we create a positive image and customer preference
through third-party endorsement.
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* Public relations is a cost-effective promotional tool. News events, publications, social
events, community relations and other public relations techniques offer companies ways to
distinguish themselves and their products from their competitors.
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* The public relations department needs to deal with various publicsstockholders,
employees, legislators, and community leaderand it also needs to support product
marketing objectives.
II. Five Major Activities of Public Relations Departments
A. Press relations: The aim of press relations is to place newsworthy information into the
news media to attract attention to person, product or service. A
favorable write-up of a restaurant in the local newspaper by the food editor has more impact
than an advertisement written by the restaurants management.
B. Product publicity: It involves efforts to publicize specific products. New products; special
events, such as food festivals; redesigned products, such as a newly renovated hotel; and
products that are popular because of current trends, such as nonfat desserts, are all potential
candidates for publicity.
C. Corporate communication covers internal and external communications and promotes
understanding of the organization. The corporate communication is directed toward the
employees and stockholders.
D. Lobbying involves dealing with legislators and government officials to promote or defeat
legislation and regulation.
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E. Counseling involves advising management about public issues, company positions and
image. Counseling is important when there may be sensitive issues associated with the
business.
Cont.

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III. Publicity: Publicity is the task of securing editorial space (not paid space), to promote a product
or service. The company does not pay for the space, though it must pay for the staff to develop and
circulate stories as well as manage certain events. It is a more credible source of information for the
customer in view of the third party reporting.
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* Marketing PR can be used for (a) new product launch (i.e., Hard Rock Caf going into the
hotel business), (b) influence specific target groups (i.e., special neighborhood events build
positive image with specific groups), (c) defend products that have encountered public
problems (i.e., using public relations to recover negative publicity), and (d) build a
favorable
corporate image to enhance the perception of the product . While public relations is
generally
more cost effective, it is also particularly effective in building awareness and brand
knowledge.
IV. The Public Relations Process - It is requisite that effective public relations be an integral
process within the firms strategy. It should consist of the following six steps:
A. Researching-Before a company can develop a public relations program it must understand
the companys mission, objectives, strategies and culture. It should also know the vehicles,
scan the environmental system, identify trends and react to the trends.
B. Establishing the market objectives-Once the PR manager has identified PR opportunities,
priorities can be established and objectives set. Possible objectives may be to:
1. Build awareness by placing stories that bring attention to a product, service,
person, organization or idea.
2. Build credibility by communicating the message in an editorial context.
3. Stimulate the sales force and channel intermediaries. PR can boost sales force and
franchisee enthusiasm.
4. Hold down promotion costs. PR costs less than direct mail and media advertising.
C. Defining the target audience- Effective PR practitioners carefully identify the publics that
they wish to reach. They identify issues that will be important to the public and form the
message so that it will seem natural and logical to the target audience.
D. Choosing the PR messages and vehicles: The PR practitioner should propose newsworthy
events that the company can sponsor. PR ideas include hosting major academic conventions,
inviting celebrity speakers, and developing news conferences.
E. Implementing the marketing PR plan: Implementing publicity requires care. PR people
look at media editors as a market to satisfy so that they will continue to use the companys
press releases.
F. Evaluating the results-PRs contribution is difficult to measure because it is used along
with other promotion tools. However, there are three measures of effectiveness:
1. The number of exposures is the easiest. Publicists supply the client with a clipping
book showing all the media that carried news about the product and a
summary
statement. This exposure measure is not very satisfying. There is no
indication of
how many people actually read, heard, or recalled the message and
what they thought
afterward. There is no information on the net audience reached either.
2. Awareness/Comprehension/Attitude change is a better measure of PR
effectiveness. For example, how many people recall hearing the news item?
How
many told others about it (a measure of word of mouth)? How many changed
their
minds after hearing it?
3. Sales and Profit contribution is the most satisfactory measure, if obtainable. A
well-planned public relations campaign is usually part of an integrated
promotional
campaign.
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V. Major Tools in Marketing Public Relations

A. Publications: Annual reports, brochures, cards, articles, audiovisual material, company
newsletters and magazines are all effective forms of print that spread the word and create
reactions. For example, McDonalds brochures, Disney Worlds video tapes.
B. Events: Events can often be developed to offer companies opportunities to invite and host
publics as well as bring repeated attention to the companys name and products or services.
Events include news conferences, seminars, outings, exhibits, contests and competitions,
anniversaries, and sport and cultural sponsorships that will reach the target publics.
C. News: PR professionals need to find or create favorable news about the company, its
product, and its people. News generation requires skill in developing a story concept,
researching it and writing a press release, as well as cultivating the relationships that are
necessary to actually get the information printed and distributed.
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D. Speeches are also another tool for creating product and company publicity. The creation of
a high-quality speech is costly for any company. A considerable amount of staff and
executive time must be devoted to the project.
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E. Public service activities: Companies can improve public goodwill by contributing money
and time to good causes. Sometimes called cause-related marketing, it may use donations or
sales percentages to support relevant community affairs.
F. Identity media: A visual identity (or logo) that can be recognized by the public
immediately. The visual identity is carried by the companys logos, stationery, brochures,
signs, business forms, business cards, buildings, uniforms, dress codes, and rolling stock.
VI. Public Relations Opportunities for the individual hospitality properties: Seldom can the
enterprises and individual properties afford costly advertising or other promotional programs, and
therefore public relations are by far the most important promotional tool available to entrepreneurs
and individual properties.
A. Build PR around the owner/operator: PR centered around the owner/operator with a
unique sense of style or service. For example, restaurant operator, Joe.
B. Build PR around location: PR built around location may be a marketing tactic to garner
the publics attention. For example, Solitaire Lodge in New Zealand for observing Halley s
Comet free of night-light pollution.
C. Build PR around a product or service: Unique products or services also serve as a PR focal
point. For example, a Dallas bar was notorious for its surly staff.
VII. Crisis Management
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* A sudden crisis is the one that comes without any warning. These can be natural disasters
such as earthquakes and floods, workplace domestic violence, an outbreak of food poisoning,
and fires. The sudden crises need to be anticipated.
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* Crisis management is to take all precautions to prevent negative events from occurring. A
crisis management program will reduce the negative effects of these events (Table 14-2).
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* The Internet is an area where major crises are being spawned. A damaging message about
your organization (whether true or not) can be spread over the Internet to millions of people.
Managers should monitor chat groups on the Internet to find out what they are saying about
their organization. When a crisis does occur, good communication with the press can reduce
the impact of negative publicity.
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* To have good crisis management the company should appoint a spokesperson. Other
employees should be instructed to refer media to this person. This ensures that the company
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is giving a consistent story. Second, this person should gather the facts and speak only from
facts.
VIII. Sales Promotion - Short-term incentives to encourage the purchase or sale of a product or
service. In using sales promotions, a company must set objectives, select the right tools, develop the
best program, pretest and implement it, and evaluate the results.
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A. Setting Sales-Promotion Objectives: Objectives vary widely, such as increasing shortterm sales, building long-term market share, enticing consumers to try a new product, luring
consumers away from competition, or holding and rewarding loyal customers.
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B. Selecting sales promotion tools: Promotion planners should take into consideration the
type of market, the sales-promotion objectives, the competition, and the costs and
effectiveness of each tool. Tools include:
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1. Samples: Samples are offers of a trial amount of a product. Some samples are free
and some companies charge a small amount to offset the cost. For example,
McDonalds offered a cup of coffee and an apple-bran muffin for
$1.00.
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2. Coupons are certificates that offer buyers savings when they purchase specified
products. Caution against over-couponing and the resultant price wars should
be
discussed. Nobody wins there. Coupons may be used to stimulate sales of
mature
products, promoting early trial of new products and creating goodwill with
joint
promotions. For example, Aloha Airlines gave passengers a coupon for a free
pizza
from Pizza Hunt.
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3. Packages: Packages involve a number of the companys products. Packages are
particularly popular with hotels and resorts that have a number of products to
offer.
The Ritz Carlton in Tysons Corners developed a Fine Art of Cuisine
weekend.
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4. Premiums are goods offered free or at low cost as an incentive to buy the product.
There is a growing trend here of merchandising that creates additional
revenue
outside of the traditional service or products. For example,
McDonalds offered
Batman figures and Hard Rock Cafs caps, T-Shirts.
5. Patronage awards: Cash or prizes offered for the regular use of the product or
service. Frequent flyer miles and bonus points for hotels or airlines are
examples.
6. Point-of-purchase promotions include displays and dimensions at the retail level.
Grocery and warehouse stores commonly have displays that offer free
samples of
food items to stimulate purchases. For example, the new passageway
of Farrells
restaurant in Hawaii.
7. Contests, sweepstakes, and games offer consumers a chance to win a prize, such as
cash or a trip. For example, Sheraton provided free trips to the Olympic Games in
Barcelona.
C. Finding Creative Ideas: The internet makes it possible to see what sales promotion
activities other companies are doing. If they are outside your market area there is a good
chance you can adapt the ideas to fit your needs. Consulting companies will also give
some ideas online as a way to attract potential clients.
D. Developing the sales promotion program includes the following decisions:
1. Incentives: All sales promotions must recognize that a certain minimum level of
incentive is needed to have any effect.
2. Conditions of participation may be legally mandated and/or linked to specific
objectives.
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mailing

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3. Promotion and distribution of the program must be a deliberate decision. How to

inform participants is also a consideration. A firm may choose to use direct
or place coupons or entry forms on product packaging.
4. Length of promotion must be stipulated. Promotions that run for too long may
create customer dissatisfaction when they end.
5. Promotion dates and budget need to be set.
E. Pre testing and implementing the plan:
Whenever possible, sales-promotion tools should be pre-tested to determine if they are
appropriate and of the right incentive size. To test sales promotions, researchers can ask
consumers to rate or rank different promotions. Companies should prepare implementation
plans for each promotion, covering lead time and sell-off time.
F. Evaluating the results: Three evaluation methods are available: (1) sales comparisons
before, during, and after a promotion; (2) surveys can provide information on how many
consumers recall the promotion, what they thought of it, how many accepted it, and how it
affected their buying patterns; (3) experiments can be used to include variables such as
incentive value, length, and distribution method.

VI: Local Store Marketing: Local store marketing, also called local area marketing or
neighborhood marketing, is defined as a low-cost, hands-on effort to take advantage of all
opportunities within the immediate trading area to promote and market a business. Examples of
public relations activities included in local store marketing are providing tours of your facility.
Primary schools look for places to take their students on field trips. A restaurant or hotel can be an
exciting venue. Cause-related promotions are another local area marketing tactic. A good local area
marketing campaign creates goodwill in the community and exposure for the restaurant that will
translate into increased business and customer loyalty.
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