Integrated Promotion Decisions Chapter 13 McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Integrated Promotion Decisions

Chapter 13

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

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The Promotion Mix: A Communication Toolkit

• Promotion decisions must consider the objectives the marketer has in mind, as well as the merits of and costs entailed in using different tools in the promotion mix.

• In making these decisions, the marketer is developing a promotional, or an integrated marketing communication (IMC) plan.

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The Promotion Mix: A Communication Toolkit

• The principal tools from which a marketer can choose in developing an IMC plan are:– Advertising– Personal selling– Sales promotion– Public relations

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Decision Sequence for Developing the Promotion Mix

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Developing an Integrated Marketing Communications Plan

• Step 1: Define the audience(s) to be targeted– Three broad ways to segment both consumer

and organizational markets:• Who the customers are• Where they are• How they behave

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Developing an Integrated Marketing Communications Plan

• Step 2: Set the promotional objectives.– SMART (Specific, Measurable, Attainable,

Relevant, and Time-bound)– Good objectives should include:

• A statement defining the target audience.• A statement of how some specific aspect(s) of the

audience’s perceptions, attitudes, or behavior should change.

• A statement of how quickly such a change is expected to occur.

• A statement of the degree of change required.

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Developing an Integrated Marketing Communications Plan

• Step 3: Set the promotion budget– The percentage-of-sales method– The competitive-parity method– The objective-and-task method

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Developing an Integrated Marketing Communications Plan

• Step 4: Design the promotion mix – First, marketers decide which promotion

components to use.– Second, they choose the specific activities

within each component.– Third, within each activity they must decide

which specific vehicle to employ.

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Strategic Circumstances and the Relative Importance of Advertising and Personal Selling as Promotional Tools

13-10

Comparing the Merits of the Promotion Mix Elements

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Developing an Integrated Marketing Communications Plan

• Step 5: Evaluate the results– Involves finding out whether the objectives of

the promotional activity have been met—often via marketing research.

– Research can also provide important insights into whether the firm attained its distribution objectives

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The Nitty-Gritty of Promotional Decision Making

• Making advertising decisions – Setting advertising objectives– Objectives must relate to attitudes or

behavior.– The use of hierarchy-of-effect models move

prospective buyers through a series of steps—awareness, comprehension, conviction, action—to the ultimate goal of purchasing the product.

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The Nitty-Gritty of Promotional Decision Making

• Setting advertising budgets and making media choices– Advertisers must choose some combination of

reach and frequency to attain their advertising objectives.

– Typically, an advertising medium provides a rate card.

– Costs are expressed in cost per thousand impressions or CPM

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The Nitty-Gritty of Promotional Decision Making

• Traditional media types

• New media

• International media

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The Nitty-Gritty of Promotional Decision Making

• Developing the creative strategy– Effective marketing communications is a task

that requires creativity and special expertise. – Managing the creative effort:

• The unique selling proposition to be delivered • The source of the message • The nature of the appeal embodied in the message

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The Nitty-Gritty of Promotional Decision Making

• Measuring advertising results

• Before Tests – tests made before the message is released on a full-run basis – Recall tests – Sales tests

• After Tests – tests done after the copy is run in the prescribed media.– Recognition tests – Recall tests

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The Nitty-Gritty of Promotional Decision Making

• Making personal selling decisions

• Planning a sales program involves four sets of decisions– Organizing the salesforce.– Development of account management

policies.– Making deployment decisions.– Developing performance expectations for

each sales rep based on forecasts.

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The Nitty-Gritty of Promotional Decision Making

• The sales cycle – The duration that it will take to meet with the

various decision makers and convince them to try the product, perhaps on a limited basis at first, and then to adopt it more fully.

• Organizing the sales effort in global markets

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The Nitty-Gritty of Promotional Decision Making

• Customer service: an increasingly important personal selling function

• Using technology to enhance sales and customer service performance

• Recruiting, training, and compensating salespeople: the keys to salesforce performance

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Evaluating and Controlling Salesforce Performance

• Companies use three main approaches in monitoring the salesforce to evaluate and control sales performance.– Sales analysis– Cost analysis– Behavioral analysis

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Evaluating and Controlling Salesforce Performance

• Making sales promotion decisions– Sales promotion is less risky than advertising. – Performance is usually easily measurable.– Primary sales promotion techniques:

• Price-off promotions• Premiums• Sampling• Rebates• Contests and sweepstakes• Trade promotions

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Evaluating and Controlling Salesforce Performance

• Making public relations decisions

• Public relations has several unique advantages:– Lots of information can be communicated.– High credibility.– Very low or nil cost to reach customer.– Supports both pull and push strategies.

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Evaluating and Controlling Salesforce Performance

• Through public relations, firms communicate with a variety of publics, including the consumer, the financial community and stockholders, the community, prospective employees, current employees, suppliers.

• Publicity can be used to accomplish different objectives among different groups.

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Take-Aways

• Marketing managers in most companies face fundamental strategic decisions about whether to emphasize advertising or personal selling in their promotion mix. Identifying the strategic circumstances provides direction for these decisions.

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Take-Aways

• Getting marketing communications messages—of any kind, in any medium—noticed and understood is no easy task. Many ads and other communication attempts simply don’t meet their objectives. Following the guidelines in this chapter will mitigate this risk.

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Take-Aways

• A clear understanding of one’s target market is essential for planning and implementing an effective promotional program. Without such an understanding, money is likely to be wasted.

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Take-Aways

• Many marketing communications efforts are not easy to evaluate. Setting clear and measurable objectives up front facilitates doing so.

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Take-Aways

• New media, including the Internet, e-mail, and mobile telephones, are predicted to revolutionize ad spending, because their results—like those for direct marketing programs—can often be directly measured.

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Take-Aways

• In companies of all sizes, technology will play an increasingly meaningful role in managing sales and customer service efficiency and effectiveness. Caution must be exercised, however, to avoid sacrificing effectiveness for efficiency.

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Take-Aways

• For new product launches on limited budgets, sales promotion alone can deliver substantial impact at a fraction of the cost of conventional approaches.