Professional Documents
Culture Documents
Promotion Strategy
Advertising Strategy
Sales Promotion Strategy
McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
PROMOTION STRATEGY
The Composition of Promotion Strategy
Developing Promotion Strategy
Communications Objectives
Deciding the Role of the Promotion Components
Determining the Promotion Budget
Promotion Component Strategies
Integrating and Implementing the Promotion Strategy
Effectiveness of Promotion Strategy
12-3
Promotion Strategy:
12-4
Composition of Promotion Strategy
Interactive/Internet
Marketing
Direct Advertising
Marketing
Promotion
Components
Personal Sales
Selling Promotion
Public
Relations
12-5
U. S. Annual Expenditures (billions)
$600
Sales Promotion
Personal Selling
$400
Advertising
$200
0
12-6
INTERNET
FEATURE Brand Advertising On-Line Has Taken Off
SEARCH WORKS
Google and Yahoo! Have demonstrated the power of the Web by using customers search
queries to connect them with advertisers.
CUSTOMERS ARE ONLINE
More than half of American households have always-on Net connections. And the Web
reaches millions at the office. The Big Three portalsYahoo, AOL, and MSNreach a
combined 50 million a day-twice the TV audience of a World Series game.
VIDEO ROCKS
The adoption of broadband, which can handle videos, lets advertisers put TV-like ads online.
Longer spots by BMW and Adidas have reached cult status. As demand for video soars,
portals sell choice slots in advance, much like TVs up-front sales.
FEEDBACK IS INSTANT
Marketers and online publishers have tools to track an ads performance in real time allowing
them to make quick adjustments if customers arent clicking. This turns the Net into a vast
marketing lab. And as video grows, it becomes a test bed for TV ads.
CUSTOMERS LEAVE TRAILS
It was an empty promise during the dot-com days, but now advertisers have the technology
to follow customers, click by click, and to hit them with relevant ads. The upshot? No wasted
money peddling dog food to cat owners.
Source: Stephen Baker, The On-Line Ad Surge, BusinessWeek, November 22, 2004, 79. 12-7
DESIGNING THE PROMOTION STRATEGY
MARKET TARGETING AND POSITIONING
STRATEGIES
COMMUNICATION
OBJECTIVES
ROLE OF PROMOTION
COMPONENTS
Advertising Sales Public Personal Direct Marketing Interactive/ Internet
Promotion Relations Selling Marketing
PROMOTION
BUDGET
Coordination
PROMOTION COMPONENT with Product,
STRATEGIES Distribution,
and Price
Strategies
INTEGRATE AND IMPLEMENT PROMOTION COMPONENT
STRATEGIES
EVALUATE EFFECTIVENESS OF
PROMOTION STRATEGY
12-8
Illustrative Communications Objectives
Need Recognition
Finding Buyers
Brand Building
Evaluation of Alternatives
Decision to Purchase
Customer Retention
12-9
Deciding the Role of the Promotion Components
12-10
Factors Guiding the Role Assigned to Each Component
Market Target(s)
Desired Positioning
Role of Promotion in Positioning
Product Characteristics
Stage of Life Cycle
Situation Specific Factors
12-11
Determining the Promotion Budget
Objective and
Task
Follow the
Competition
12-12
Budgeting Methods
Features Limitations
Percent of Sales Percent of Sales
Fixed percent of sales, often based on The method is very arbitrary. Budget may
past expenditure patterns. be too high when sales are high and too
low when sales are low.
12-13
Integrating and Implementing Promotion Strategy
Avoiding fragmentation
Difficulty in evaluating productivity
Differences in priorities
Separate organizational units
Assigning integration responsibility
12-14
Illustrative Factors Affecting Promotion Strategy
Advertising/ sales Balanced Personal selling
promotion driven driven
12-15
Promotion Strategy Issues
Expense/Response Relationships
Allocation
Impact on Brand Equity
Integration of Promotion Components
Effectiveness of the Strategy
12-16
ADVERTISING STRATEGY
12-17
The Internet is Shifting the Power Position to the Customer
* How the Money is Spent is Changing.
* The Amount Spent on Internet Advertising is a Small
Fraction of the Total, but Very Powerful and Growth
is Accelerating.
* Consumers Spend 10 hrs/person/day with Media of
all KindsHow Much is Media Multi-Tasking?
* Ad Spending Versus Consumers Time Allocations.
* Advertising Agency Consolidation and
Reorganizationthe Big 4.
* Do Companies Recognize the Revolutionary
Implications of Newly Empowered Consumers?
* The Internet Will be the Most Prominent Medium in
the Lives of the 18-34 Age Group.
Source: The Economist, Crowned at Last: A Survey of Consumer Power, April 2, 2005, 1-16.
12-18
Advertising Strategy
Target Audience
Advertising
Objectives
Advertising Budget
Creative Strategy
Create awareness
Change attitude(s)
Increase Sales
Generate profits
12-20
Alternative Levels for Setting Advertising Objectives
Increasing Uncertainty
About Impact on
Purchasing Behavior
Type of Objective
Exposure
Awareness
Attitude
Change
Sales
Budget
Determination
Media/ Creative
Scheduling Strategy
Decisions
12-22
The Vuitton Machine*
Inside the worlds biggest, most profitable luxury brand
BENCHMARKING VUITTON
Brand 2003 Sales Percent Operating
Billions Change* Margin
Louis Vuitton $3.80 +16% 45.0%
Advertising
(How to communicate
intended positioning to
buyers and others influencing
the purchase.)
Television
Radio
Magazines
Online
Website
Outdoor
12-25
Relative access
to the target
audience
Favorable zone
Unfavorable zone
Relative cost of
reaching the target
group(s)
12-26
Advertising Agencies in Perspective
12-27
Role of the Advertising Agency
Target Audience
Advertising Objectives
Advertising Budget
Creative Strategy
Advertising
Agency
Advertising Media and
Programming
12-29
Rating
Services
Sales and
Test Expense Analysis
Marketing MEASURING
ADVERTISING
EFFECTIVENESS
Controlled Recall
Tests Tests
12-30
SALES PROMOTION STRATEGY
SALES PROMOTION
12-31
STRATEGY
The Realities of Mail-in Rebates
FEATURE
* Consumers hate the hassles, companies love unredeemed rebates, and
regulators are investigating the consumer complaints.
* As much as 40% of rebates never get redeemed.
* Some 400 million rebates are offered each year with a total value of $6
billion.
* Unclaimed rebates translate into more than $2 billion of extra revenue for
retailers and their suppliers each year.
* Complex filing rules and long delays discourage consumers.
* Companies emphasize the filing processes are intended to discourage
fraud.
* The largest rebate processor monitors 10,000 addresses suspected of
submitting bogus rebates.
* Rebates offer companies an opportunity to promote small discounts
without marking the products down.
* Rebates have become very popular with computer and consumer-
electronics companies.
12-32
* The value of rebates has also increased.
* Regulators are intensifying their scrutiny of the companies offering
rebates.
* The developing back-lash against rebates is pushing some companies to
halt rebate strategies.
* Others are encouraging online filing.
* Fulfillment houses are revising their processing systems, using computer
technology to validate claims.
* Consumers would like mail-in rebates to go away but want the best price
they can get.
Source: Brian Grow, The Great Rebate Runaround, BusinessWeek, December 5, 2005, 34, 36, and 37.
12-33
Sales Promotion Activities and Targets
Activities include trade shows, specialty
advertising, contests, displays, coupons,
recognition programs, and free samples.
SALES
PROMOTION
TARGETS
Consumer Salespeople
Buyers
Business Value Chain
Buyers
12-34