Marketing Communications, Promotion & Pricingyeagerwt/Chaps_19_20_21.pdf · There are five key elements of Marketing Communications. 3 Sales Promotion ... – Can destroy pricing

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Marketing Communications, Promotion & Pricing

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Marketing Communications Mix

• Advertising• Public Relations• Sales Promotion • Personal Selling• Direct Marketing* (authors don’t include)

There are five key elements of Marketing Communications

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Sales Promotion

• Usually intended to produce immediate results and generate additional sales

• Generally used in conjunction with other marketing communication elements

• Two basic types:– Consumer sales promotion – Trade sales promotion

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Sales Promotion

• Consumer sales promotion– Directed at ultimate end-users or the product

or service

• Trade sales promotion– Directed at retailers, wholesalers, or other

business buyers

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Sales Promotion

• Positives– Supports brand image

– Stimulates demand– Focuses customers’ attention

• Negatives– Can destroy pricing levels if overused

– Can cause loss of market share– At times, may hurt brand image

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Sales Promotion

Trade Promotion methods include:• Buying & Buy-Back Allowances• Merchandising Allowances• Scan-Back Allowances• Free Merchandise• Cooperative Advertising• Spiffs & Push Money• Sales Contests• Trade Show exhibits

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Sales Promotion

Consumer Elements include:• Coupons, Incentives & Premiums• Samples• Point-of-Purchase displays• Demonstrations• Sweepstakes, Games and Contests• Rebates

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Personal Selling

• Interpersonal paid communication between a buyer and a seller– Allows immediate feedback

– Dynamic in nature– Flexible

– Excellent for establishing and nurturing relationships

• Important when the product is complex

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Personal Selling

• Three primary types of communication between a buyer and a seller– Kinesic (motion)

– Proxemic (varying of distances)– Tactile (actual touching)

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Personal Selling

• Elements of the Process– Prospecting

– Pre-approach– Approach

– Making the presentation– Overcoming objections

– Closing the sale– Follow up

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Personal Selling

Types of Sales People• The Order-Taker

– Inside– Field

• The Order-Grabber– New Business– Keeping Current Customers happy

• Support Staff– Technical– Trade– Missionaries

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Personal Selling

Elements of Managing the Sales Force• Objectives

• Number of Salespeople• Recruitment, Selection & Training

• Compensation Plans• Motivation

• Territorial Management• Evaluation & Control

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Advertising

• Nonpersonal• Paid for by an identifiable sponsor• Disseminated through mass channels of

communication to promote the adoption / purchase of goods services, persons or ideas

• Most recognized form of marketing communication

• Efficient because it reaches a large audience

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Advertising

Types of Advertising include:• Institutional• Advocacy • Product-oriented• Pioneering• Competitive• Comparative

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Advertising

Media includes:• Television• Radio • Outdoor signage• Magazines• Newspapers• The Internet

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Advertising

Steps to a Successful Advertising Campaign:• Identify and know your target audience• Define what you want to accomplish • Develop the advertising platform• Determine the resource allocation• Generate a media plan• Create the advertising message based on the

corporate positioning statement• Execute the campaign• Monitor and Measure (evaluate the results)

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Advertising

Key terms to know:• Artwork• Copy• Layouts• Illustrations• Storyboards• Pre- & Post-tests• Aided & Unaided Recall tests• Monitor and Measure (evaluate the results)

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Public Relations

• Attempts to positively influence feelings, beliefs, and opinions

• Publicity is the primary element– Non-paid for communications– In media form (often news media)

– Not totally controlled by the sponsoring company

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Public Relations

• Key Publicity tools:– New releases

– Feature articles– Captioned photos

– Press conference

• Audits/Research– PR– Social

– Communications

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Public Relations

• Negative PR– Always at the worst time

– Happens fast– Need a contingency plan with appropriate

policies and procedures– Honesty is best policy; no cover-ups

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Pricing

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Price

• Price Competition– Allows flexibility

– Can generate a price war detrimental to all

• Non-Price Competition– Emphasis is on product features, services,

quality, packaging, etc.– Only effective if the purchaser can perceive

these differences– Must have a Unique Competitive Advantage

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Price

• Reflects the economic sacrifice of the customer.

• Easiest element of the Marketing Mix to change

• Changes more easily implemented• Through its elasticity, has an effect on

customer demand• Among the most important decisions faced

by a marketer

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Current Impacts on Pricing

• Global pricing considerations• Internet pricing effects• Competitive reactions• Current economic conditions• Ethical and Legal restraints

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Pricing Objectives

• There are five basic pricing objectives:– Ensuring market survival– Enhancing sales growth– Maximizing company profits– Deterring the competition from entering a

market position or niche – Establishing/maintaining a particular

product/quality image

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Influences on Pricing Decisions

• The five “C”s of Pricing:– Costs– Customers– Channels of Distribution– Competition – Compatibility (with overall corporate goals)

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Customer Price Evaluations

• Judgments of perceived value (the reasonable price)

• Price/Quality Relationship• Consumer Use of Price Information

– Best value strategy – Price-aversion strategy– Price-seeking strategy– Comparison of advertised price strategy

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Key Pricing Definitions

• Price Elasticity

– How sensitive is Demand to a change in Price

• Marginal Revenue– The change in total revenue when the firm

sells one additional unit

• Average Fixed Cost– The fixed cost per unit produced

• Variable Costs– Vary directly with the number of units produced

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Key Pricing Definitions

• Marginal Cost– The extra cost incurred when the firm produces

one additional unit

• Break-Even Point– Occurs when total revenue equals total costs

– Comparison of advertised price strategy

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Business Pricing

Discounts are typical• Trade – off of list price• Quantity – for larger orders• Cash – faster payment 2/10 net 30• Seasonal – to stimulate demand• Allowances – trade-ins, etc.

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Business Pricing

• Geographic Pricing is common• Transfer Pricing takes place within the

corporate structure

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Types of Pricing

• Cost-based– Standard Mark-up

– Cost-Plus

• Demand-based– Fluctuates based on supply & demand (lumber)

• Competition-based– Competitors’ pricing serves as the baseline for

pricing levels