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Advertising & Sales Promotion

By : Amandeep Kaur MBA (Hons) Roll No. - 63

A man who is master of patience is master of everything else George Savile

Quote Of The Day

Objectives of Todays Presentation

Understand the roles of advertising and sales promotion, in the promotion mix. Know the major decisions involved in developing an advertising program.

Advertising

Definition
Advertising
Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.

Advertising objective
A specific communication task to be accomplished with a specific target audience during a specific period of time.

Advertising Objectives
Informative advertising Persuasive advertising Reminder advertising

Advertising strategy
1.Creating the advertising message Message strategy Message execution 2.Selecting advertising media Deciding on reach ,Frequency, and Impact Choosing among major media types Selecting specific media vehicles decide on media timing

Execution styles
Slice of life Lifestyle Fantasy Mood or image Musical Personal symbol Technical expertise Scientific evidence

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Strategy Planning for Advertising

Target Market

Product

Place

Promotion

Price

Personal Selling Advertising

Mass Selling

Sales Promotion Publicity

Target audience

Kind of advertising

Media types

Copy thrust

Who will do the work?

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Target Audience
The marketing manager should be very specific about who the company is trying to reach. Advertising campaigns can be narrowed very accurately to appeal to very specific groups of people.

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Setting Advertising Objectives

Introduce New Products Position Brands

Obtain Outlets
Ongoing Contact

Strategy Decisions in Setting Advertising Objectives

Support Sales Force Get Immediate Action Maintain Relationships

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The 5 Ms of Advertising

Major Advertising Decisions

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Kinds of Advertising
Product advertising - tries to sell a product.
Aimed at final users or channel members.

Institutional advertising - tries to promote an organizations image, reputation, or ideas

Its objective is to build goodwill to improve an organizations relations with various groups. Aimed at customers, current and prospective channel members, suppliers, shareholders, employees, and the general public.

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3 Kinds of Product Advertising

Pioneering Competitive direct, indirect, comparative

Kinds of Product Advertising

Reminder
16-5

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Coordinating Advertising Efforts

Advertising allowances - price reductions to channel members to encourage them to advertise or promote the product locally. Cooperative advertising involves middlemen and producers sharing in the cost of ads.

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Choosing Media
There is no one best media, it depends on:
Promotion objectives Target markets you want to reach Funds available for advertising Nature of the media (reach, frequency, impact and cost)

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Choosing Media
Television Yellow Pages

Newspaper

Magazine

Major Kinds of Media

Direct Mail Outdoor

Radio
16-6

Internet

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Advertising on the Internet

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Many Forms

Seek Direct Response

More Exposure

Better Targeting

Context Ads/Pointcasting

Pay for Results

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Planning the Message

Get Attention

Hold Interest

Arouse Desire

Obtain Action
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Getting the Work Done

Advertising managers

In-House advertising
Advertising agencies
Outsider viewpoint Economical Offer specialized services

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Advertising
Business firms, not-forprofit firms, social agencies, and professionals such as doctors and lawyers all advertise.

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Advertising
Key Decisions:
Setting objectives
Setting the budget Developing the advertising strategy Evaluating advertising campaigns
Advertising objectives can be classified by primary purpose:
Inform
Introducing new products

Persuade
Becomes more important as competition increases Comparative ads

Remind
Most important for mature products

Comparative advertising can be extremely persuasive

Do these ads attempt to inform, persuade, or remind?

How effective are these ads?

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Advertising
Key Decisions:
Setting objectives Setting the budget Developing the advertising strategy Evaluating advertising campaigns
Methods of budget setting were listed in chapter 15 Several factors should be considered when setting the ad budget:
Stage in the PLC Market share Level of competition Ad clutter Degree of brand differentiation

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Advertising
Key Decisions:
Setting objectives Setting the budget Developing the advertising strategy Evaluating advertising campaigns
Creative challenges
Media fragmentation Soaring media costs Advertising clutter

Creating ad messages
Message strategy
Creative concept Advertising appeal

Message execution
Many execution styles Tone, format, illustration, headline, copy

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Advertising
Creative Execution Styles
Slice of Life Lifestyle Fantasy Mood or Image Testimonial Evidence or Endorsement

Musical Personality Symbol Technical Expertise Scientific Evidence

Celebrity endorsers may be movie stars, politicians, sports stars, or other public personalities

Testimonials feature ordinary people who talk about their product experiences

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Advertising
Key Decisions:
Setting objectives Setting the budget Developing the advertising strategy Evaluating advertising campaigns
Select advertising media
Decide on level of reach, frequency and impact Choose among the major media types by considering:
Consumer media habits, nature of the product, types of messages, and costs

Select specific media vehicles Decide on media timing

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Advertising

Major Media Types Radio Magazines Outdoor

Internet

Newspapers Television Direct Mail

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Advertising
Key Decisions:
Setting objectives Setting the budget Developing the advertising strategy Evaluating advertising campaigns
Measuring communications effects
Copy testing Consumer recall Product awareness Product knowledge Product preference

Measuring sales effect

Past vs. current sales comparison Experimentation

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Advertising
Organizing the Advertising Function
Small vs. large companies Nature of advertising agencies Advantages of advertising agencies Departments Compensation Changes in agency services

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Advertising
Advertising to International Markets
Advantages of standardizing worldwide advertising:
Lower advertising costs Greater global ad coordination Consistent global image

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Advertising
Advertising to International Markets
Drawbacks to standardizing worldwide advertising:
Ignores differences in demographics and economic conditions Ignores differences in culture

U.S., Thai, & German websites reflect the worldwide Jeep brand image of ruggedness and reliability

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Advertising
Advertising to International Markets
Most marketers think globally but act locally

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Measuring Advertising Effectiveness

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Consider the Total Mix

Research and Testing May Improve Odds

Build Upon What Works

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Avoid Unfair Advertising

The FTC has the power to control unfair or deceptive advertising. It can require:
affirmative disclosures corrective advertising

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Top Ad Spenders (1992)

P&G Phillip Morris GM Ford Chrysler Pepsi 1174 million 1090 948 602 567 556

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Top Categories
Automotive Retail Food Restaurants Entertainment Telephone 3597 2879 1780 1334 1065 732

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Media
Newspapers Network TV Spot TV Magazines Cable TV Spot Radio Outdoor 10862 10733 9399 7105
1590 1092 655

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Top Brands
McDonalds Sears Ford Kelloggs AT&T Toyota General Mills

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Push versus pull strategy

Push Strategy: Promote to retailers and create demand
e.g., Trade promotions, quantity discounts, stock-up

Pull Strategy: Promote to customers and create demand

e.g., Advertising, coupons

When to use more push versus pull

Mature markets, Demand less than supply, Brand not strong

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STEPS IN DEVELOPING EFFECTIVE COMMUNICATIONS

1. Identify the target audience 2. Image Analysis: what the consumer thinks about the product. - desired image vs. current image 3. Determine the communication objectives:
Awareness - simple message, repeat name Knowledge Liking Preference Purchase

4. Designing the message:

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AIDA Model
Attention
Interest Desire

Action

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Message content
Rational appeal Emotion appeal: Fear appeal Moral appeal Humor

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Types of Ads
Informative Ad - new products Persuasive Ad - mature products Comparative Ad - Nissan and Honda Reminder Ad - Coke, Nike Corrective Ad - Listerine Advocacy Ad - MADD, AIDS, Drugs

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Message Structure
Conclusion drawing: Explicitly stated or inferred
Educated audience: Better let them infer Complex product: Explicitly state conclusion good for favorably disposed audience

One sided message: Only positive info. Two sided message: Both sides

good when audience is opposed, better educated

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Message Format
Headline Copy Illustration Color

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Message Source
Characteristics of a good source:
Experience Likeability Trustworthiness

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Types of Media
Television
National, Spot

Radio Print magazines, newspapers Outdoor billboard Internet Direct mail

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Alternative media:
Stalls in restrooms Shopping carts Heads and bodies Parking meters Back seat of taxi

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How to select media

Based on: Nature of the product Type of message Cost of production Cost - CPM (cost per thousand)

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Evaluation of the effectiveness of campaign

Pre-testing
Direct rating Laboratory tests Split cable testing

Post testing
Unaided/aided recall Recognition Intention to buy

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Sales Promotions

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Promotion Mix / Communication Mix (PR)

Sales Promotion PR Selling Advertising
Below the line Above the line

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Definition
Sales Promotion
Sales Promotions are short-term incentives to encourage the purchase or sale of a product or service.

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Sales Promotion
Sales Promotions
Can be targeted at final buyers, retailers and wholesalers, business customers, and members of the sales force. The use of sales promotions has been growing rapidly.

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Sales Promotion
Sales promotion activities:
may be aimed at consumers to:
stimulate trial, increase inventory or consumption, encourage repurchase, neutralize competitive promotions, affect the sales of complimentary products, avoid price reductions.

may be aimed at middlemen to:

gain or maintain distribution, influence retailers to promote the brand, load the reseller with inventory, defend the brand against competitors, avoid price reductions.

may be aimed at employees

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Sales Promotion
Sales promotion activities can usually be implemented quickly and get results sooner than advertising.

Spending on sales promotion exceeds spending on advertising. Sales promotion my erode brand loyalty.

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Sales Promotion
Sales Force Promotions:
Signing up new accounts Stimulating sales of specific items

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Sales Promotion
Key Decisions When Developing the Sales Promotion Program:
Size of the incentive Conditions for participation Promotion and distribution of the actual sales promotion program Length of the promotional program Evaluation
Surveys and experiments can be used

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Possible Effects of Sales Promotion

Unit Sales
Period of promotion

Sales temporarily increase, then decrease, then return to regular level

Time

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Possible Effects of Sales Promotion

Unit Sales Period of promotion

Sales temporarily increase and then return to regular level

Time Exhibit 16-6B

16-12

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Possible Effects of Sales Promotion

Unit Sales Period of promotion

Sales increase and then remain at higher level

Time

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What a sales promotion should be.

Lets go back to the basics Should hit the consumer at a particular behavioral stage Are marketing communication activities that change the price/value relationship of a product / service perceived by the target
Generating immediate sales Altering long term brand value

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Planning Sales Promotion

Who is our target set of consumers? What is the reason for that behavior What is the goal of the program Is there a meaningful economics attached to sales promotion

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Types of Buyers
Loyals
Buy a particular brand on a more or less consistent basis

Competitive loyals
People who are loyal to the competing brand

Switchers
Purchase of various brands in one category

Price buyers Non Users

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Results that are needed .

Loyals
Reinforce behavior Increase consumption Change buying timing
Break loyalty Encourage brand switching Persuade to buy the right brand more often Value added to make price less important Create awareness, create category worth

Competitive loyals Switchers Price

Non users

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Types of sales promotions

1.Trade promotions
Advertising allowances, joint promotions, training, slotting allowances

2.Consumer promotions
Coupons, rebates 330b cpns, face value $194b Deals / discounts

3.Volume Promotion 4.Advertising Promotion 5.Cooperative Promotion 6.Co-Branding

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What do we want the consumers and trade to do?

Buy More Buy Now

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Choose the right promotion for the right situation

Example
Problem
New product Consumers not loyal

Solution
Sampling, on pack promo Rebates, sweepstakes, loyalty cards

Competitors are attacking the market with ads

Excess inventory Shelf life is critical

Price off, free goods, premiums, rebates, etc

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1.Trade Promotion
Encourages your trade channel to load up Move inventory from the company to the warehouse of the trade
Distributor or Key Accounts

Deals with promotional tools for staff and sales people who are involved with the trade.

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Sales Promotion
Trade Promotions:
Obtaining distribution and shelf space Encouraging retailers to advertise the brand

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Sales Promotion
Trade Promotion Tools
Discounts (also called price-offs, off-list, and off-invoice discounts) Allowances Advertising allowances Display allowances Free goods Push money Specialty advertising items

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Sales Promotion
Business Promotion Tools
Includes many of the same tools used in trade and consumer promotions Two additional tools:
Conventions & trade shows Sales contests

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Sell in (PUSH STRATEGY)

Trade Promotion based on
Volume buy a certain volume to attain a high discount Prompt Payment pay on time and get a discount Free goods using new products or slow moving products as promotional items

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Trade promotions growing. Why?

Growing retailer power Lower brand loyalty Competition Retailers have demand data and are in a better bargaining position

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2.Consumer Promotion
To induce immediate off take from the shelf To induce trial To buy more of your products To buy immediately

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Sales Promotion
Consumer Promotions:

Increase shortterm sales Generate product trial

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Types of consumer promotions

Coupons in pack / on pack / FSI coupons Rebates cash refund Premiums - buy two, get a free toy / t-shirt for $5 Deals / discounts/ price bundles Samples Sweepstakes Contests Continuity programs frequent flier miles POP: Point of purchase displays

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Who is a coupon prone household ?

Income Low medium high Education Low Medium high Family size Large/small Small children Y/N Home owners / renters Car owners Are coupons profitable? Redemption / Misredemption

Checkout direct offers marketers an excellent opportunity to reach users of the competition Coupons are only issued to those who purchase specific brands

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3.Volume Promotion
It motivates the dealer to buy more Example
10+1 promotion buy 10 boxes get one free Volume discounts Bundle promotion feature a new product as freebie

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4.Advertising Promotion
Cooperative advertising
Coke and Julies Bakeshop Lock in to the outlet to exclusively sell your brand

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5.Cooperative Promotion
Co-branding Using another brand to penetrate the market Good if the equity of the other brand is high or parallel

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6.Co-branding
Can be a strategy or a promotion It increases margin Synergizes strength of two brands Increases profitability due to the higher value perception

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Types of Sales Promotions

Coupon Bonus Packs In pack, On pack, and Near Pack Specialty container Continuity program Refund Sweepstakes Contest Through the mail Premium Sampling Price off Trade deal Cause related promotion

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Coupons
Clip and bring to the store to exchange Now it is phone based Induce loyalty Repeat purchase Keeps the consumers locked

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Bonus Packs
Like bundle pricing but this is temporary Adds value

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In Pack, On Pack Promotion

It is used to introduce new products / service Dispose of excess inventory Use excess overhead

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Specialty Container
Increases products perceived value Uy tignan mo ito meron libreng pitchel

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Continuity Program /Loyalty Cards

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Refund / Rebate Promotion

If the product does not perform, then its money back Or consume X number of products and get Y FREE Increases consumer confidence Loyalty program

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Sweepstakes
Chance game where the consumer has the chance to win something big through purchases The more purchases, the more tickets Creates loyalty

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Sampling
Used when the consumer is unaware of the brand or product Product buying is prone to retail channel based trial Use when the product can be broken down into smaller dimensions

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Price off promotion

Use for slow moving items Excess inventory Off season Dislodge competitors

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How Sales Promotions Work ?

Blattberg, Briesch, Fox - Marketing Science 1997 Temporary price reductions substantially increase sales Higher market share brands are less deal elastic The frequency of deals changes the consumers reference price Greater the frequency of deals, the lower the height of the deal spike

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How Sales Promotions Work?

Cross promotional effects are asymmetric promoting higher quality brands impacts weaker brands more than vice-versa Retailers pass through less than 100% of the trade deals Display and feature advertising have strong effects on item sales Advertised promotions can result in increased store traffic Promotions affect sales in complementary and competitive categories

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Sales Promotions
Majority of promotional volume comes
from switchers category expansion
Store switching purchase acceleration Stockpiling

Promotional elasticities are greater than price elasticities

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A sales promotion should be

Temporary if not the consumers would not believe it the next time Great Value Added they should find reason to buy now and more

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Why the Growth???

Instant results Faster implementation Measurable Relatively easy and inexpensive

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The Downside of Sales Promotion

Brand Erosion Profitability increase is relatively low Implementation cost and problems Orients marketing managers towards short term results

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Thank You So Much For Your Patience!!

Any Questions Please..