Chap017

Consumer Behavior and Promotion Strategy

Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

Chapter 17

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• Promotion defined

• Advertising– Any paid, nonpersonal presentation of

information about a product, brand, company, or store

– Usually has an identified sponsor– Has been characterized as image management– May be conveyed via a variety of media

Types of Promotion

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• Sales promotion– Direct inducements to the consumer to make a

purchase– Difficult to define sales promotions due to many

types

• Personal selling– Direct interactions between a potential buyer

and a salesperson

Types of Promotion cont.

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– What makes it a powerful promotion method?– Certain consumer products are traditionally

promoted through personal selling– For other businesses, a form of personal selling

by telephone, called telemarketing, has become popular

• Publicity– Any unpaid form of communication about the

marketer’s company, products, or brands

Types of Promotion cont.

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– Can either be positive or negative– Can sometimes be more effective than

advertising because consumers may not screen out the messages so readily

• The promotion mix– Ideally, marketing managers should develop a

coherent overall promotion strategy that integrates the four types of promotions into an effective promotion mix

Types of Promotion cont.

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– A controversy continues in marketing about the relative importance of advertising vs. sales promotions

– The promotion mix of the future is likely to be more eclectic with many more options

Types of Promotion cont.

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A Communication Perspective• The cognitive processing model of decision

making is relevant to an understanding of the effects of promotions on consumers

• The communication process– Key factors

• Source• Encode• Transmit• Receiver• Decode• Action

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A Communication Perspective cont.

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A Communication Perspective cont.– Two stages of the communication are

particularly important to the success of promotion strategies

• Encoding• Decoding

• Goals of promotion communications– Effects can be ordered in hierarchical sequence

of events or actions that are necessary before consumers can or will purchase a brand

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A Communication Perspective cont.– Effects can be treated as a sequence of goals

or objectives for promotion communications– Stimulate category need

• Need to create beliefs about the positive consequences of buying and using the product category or form

• Typically use advertising to stimulate category need

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A Communication Perspective cont.– Brand awareness

• A general communication goal for all promotion strategies

• Level of brand awareness necessary for purchase varies depending on how and where consumers make their purchase decisions

• Ask consumers to state the brand names they can remember or recognize as familiar

• A company’s brand awareness strategy depends on how well known the brand is

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A Communication Perspective cont.– Brand attitude

• Create a brand attitude• Maintain existing favorable brand attitudes• Increase the existing brand attitude• Cannot analyze consumers’ brand attitudes in an

absolute or very general sense without specifying the situational context

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A Communication Perspective cont.– Brand purchase intention

• Most promotion strategies are intended by marketers to increase the probability that consumers will buy the brand

• To develop effective promotion strategies directed at brand purchase intention, marketers must know when BI are formed by most of the target customers

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A Communication Perspective cont.• More typically, formation of a brand BI is delayed

until well after exposure to advertising, when the consumer is in a purchase context

• Personal selling and sales promotion are usually designed to influence purchase intentions at the time of exposure to the promotion information

– Facilitate other behaviors• Some promotion strategies are designed to facilitate

behaviors other than purchase

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The Promotion Environment• Includes all stimuli associated with the

physical and social environment in which consumers experience promotion strategies

• Two environmental factors can influence advertising and sales promotion strategies

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The Promotion Environment cont.– Promotion clutter

• The growing number of competitive strategies in the environment

• Possible that clutter created by multiple ads during commercial breaks and between TV programs will reduce the communication effectiveness of each ad

• Also affects other types of promotion strategies, especially sales promotions

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The Promotion Environment cont.– Level of competition

• A key aspect of the promotion environment• Comparative advertising, featuring direct

comparisons with competitive brands, has become more common’

• Promotion often becomes the key element in the marketers’ competitive arsenal in fiercely competitive environments

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Promotion Affect and Cognition• Interpretation of promotion communications

and integration processes are extremely important

• Consumers’ comprehension processes vary in depth and elaboration, depending on their levels of knowledge and involvement

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Promotion Affect and Cognition cont.

• Attitude toward the ad– The affective evaluations of the ad itself can

influence the attitudes toward the advertised product or brand

– Ads that consumers like seem to create more positive brand attitudes and purchase intentions than ads they don’t like

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Promotion Affect and Cognition cont.

• The persuasion process– Refers to changes in beliefs, attitudes, and

behavioral intentions caused by a promotion communication

– The Elaboration Likelihood Model (ELM)• Identifies two cognitive processes by which

promotion and communication can persuade consumers

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Promotion Affect and Cognition cont.– The central route to persuasion is more likely when

consumers’ involvement is higher– The peripheral route to persuasion is more likely when

involvement is lower

• Also distinguishes between two types of information in the promotion communication

– Central route to persuasion– Peripheral route to persuasion

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Promotion Behavior• Information contact

– Consumers must come into contact with promotion information for it to be successful

– Information contact with promotions may be intentional, but probably is most often incidental

– Placing information in consumers’ environments may be easy when target consumers can be identified accurately

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Promotion Behavior cont.– Cold calls vs. referrals and leads– Use of telemarketing– Consumers must also attend to the promotion

messages

• Word-of-mouth communication– Helps to spread awareness beyond those

consumers who come into direct contact with the promotion

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Managing Promotion Strategies• Analyze consumer-product relationships

– Requires identifying the appropriate target markets for the product

– May require considerable marketing research to learn about the consumer-product relationship

– The FCB grid

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Managing Promotion Strategies cont.

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Managing Promotion Strategies cont.

– Based on consumers’ involvement and their salient knowledge, meanings, and beliefs about the product

– Think products– Feel products– The appropriate promotion strategy depends on

the product’s position in the grid

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Managing Promotion Strategies cont.

• Determine promotion objectives and budget– Promotion strategies may be designed to meet

one or more of the following objectives• To influence behaviors• To inform• To transform affective responses• To remind

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Managing Promotion Strategies cont.

– Before designing a promotion strategy, marketers should determine their specific promotion objectives and the budget available to support them

– Some promotions have multiple objectives– Some promotions are designed to first influence

consumers’ cognitions in anticipation of a later influence on their overt behaviors

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Managing Promotion Strategies cont.

• Design and implement a promotion strategy

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Managing Promotion Strategies cont.

– Must be sensitive to the consumer-product relationships represented in different market segments

– Various consumer segments to be considered– Appropriate promotions depend on the type of

relationship consumers have with the product or brand, especially their intrinsic self-relevance

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Managing Promotion Strategies cont.

– Promotion methods vary in their effectiveness for achieving certain objectives

– Promotion objectives will change over a product’s life cycle as changes occur in consumers’ relationships with the product and the competitive environment

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Managing Promotion Strategies cont.

– Developing advertising strategy• Specify advertising strategy in terms of the type of

relationship the consumer will have with the product or brand

• MECCAS model can help marketers understand the key aspects of ad strategy and make better strategic decisions

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Managing Promotion Strategies cont.

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Managing Promotion Strategies cont.• MECCAS defines four elements of advertising

strategy– Driving force– Leverage point– Consumer benefits– Message elements

• The executional framework• Consumer-product relationship• The driving force• Leverage point

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Managing Promotion Strategies cont.• An advertising strategy should specify how a brand

will be connected to the important ends the consumer wants

• Developing personal selling strategies– ISTEA model

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Managing Promotion Strategies cont.

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Managing Promotion Strategies cont.• Model suggests salespeople’s influences depend on

their skills at performing five basic activities– Developing useful impressions of the customer– Formulating selling strategies based on these impressions– Transmitting appropriate messages– Evaluating customer reactions to the messages– Making appropriate adjustments in presentation should the

initial approach fail

• ISTEA model is consistent with the communication approach to consumer promotions

• Model emphasizes analysis of the customer as the starting point

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Managing Promotion Strategies cont.

• Evaluate effects of the promotion strategy– Involves comparing its results with the

objectives– Determining promotion effects can be difficult– Promotion objectives stated in behavior terms

can be hard to evaluate

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Managing Promotion Strategies cont.

– In some cases, evaluation of promotion effects can be relatively straight-forward

– Measuring advertising effects• Three broad criteria have been used as indicators

– Sales– Recall– Persuasion

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Summary• Discussed how knowledge about

consumers’ affect and cognitions, behaviors, and environments can be used by marketers in developing more effective promotion strategies

• Described four types of promotions

• Detailed how the basic communication model can be used

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Summary cont.• Discussed important aspects of the

promotion environment, affective and cognitive responses to promotions, and promotion-related behaviors

• Examined a managerial model for designing and executing promotion strategies

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Summary cont.• Described the various goals and objectives

marketers may have for promotion strategies

• Looked at two special models for developing advertising strategies and personal selling strategies

• Discussed how to evaluate the effectiveness of promotion strategies