MKT5 - Slide 1 to 14 1 5. Promotion Strategy MKT5

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5. Promotion Strategy5. Promotion Strategy

MKT5MKT5

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What is promotion?What is promotion?

►An organization communicating with An organization communicating with customerscustomers

►A business’ total communications A business’ total communications program is referred to as its program is referred to as its Promotional Promotional MixMix

►Promotional mix comprise:Promotional mix comprise: AdvertisingAdvertising Personal sellingPersonal selling Sales promotionSales promotion Public RelationsPublic Relations


AdvertisingAdvertising

► Paid form of non-personal communication of Paid form of non-personal communication of ideas/products in the prime mediaideas/products in the prime media

► Prime media:Prime media: TVTV NewspapersNewspapers MagazinesMagazines Billboard postersBillboard posters RadioRadio CinemaCinema OthersOthers

► 2 Aspects: message & medium2 Aspects: message & medium


Personal SellingPersonal Selling

►Most effective as it allows approach to be Most effective as it allows approach to be tailored to needs of the individual customertailored to needs of the individual customer

► Involves:Involves: Constructive dialogue with customers to identify Constructive dialogue with customers to identify

their needstheir needs Promote products & company benefits on an Promote products & company benefits on an

individual basisindividual basis Answer questions, resolve problemsAnswer questions, resolve problems Get feedbackGet feedback Make a saleMake a sale


Personal Selling (contd)Personal Selling (contd)

►May have to use sales forceMay have to use sales force► Sales force use Sales force use push strategy►Push strategy: encouraging intermediaries

to buy the product► (Pull Strategy: support retailers by

providing after sales service – encouraging consumers to demand the product) Push used in personal selling , advertising and

sales promotion►Advantages & disadvantages? See p 299


Sales PromotionSales Promotion

►Providing incentives for customers/ Providing incentives for customers/ distribution channel to stimulate distribution channel to stimulate demand for productdemand for product

►Specific, usually short-termSpecific, usually short-term►When used effectively, will help move When used effectively, will help move

old stocks, counteract competitor old stocks, counteract competitor activity, merchandise new products & activity, merchandise new products & encourage repeat buyingencourage repeat buying


Sales Promotion (contd)Sales Promotion (contd)

► Commonly referred to as “Below the Line” Commonly referred to as “Below the Line” promotion. Directed at:promotion. Directed at: Ultimate consumer (pull strategy)Ultimate consumer (pull strategy) Distribution channel (push strategy – known as “selling into Distribution channel (push strategy – known as “selling into

the trade”)the trade”)► Methods: Methods:

Price promotionsPrice promotions CouponsCoupons Gifts with purchaseGifts with purchase Competitions & prizesCompetitions & prizes Money refundsMoney refunds Frequent user/loyalty incentivesFrequent user/loyalty incentives Point-of-sales displaysPoint-of-sales displays


PublicityPublicity

►Communication of a product, brand or Communication of a product, brand or business by placing info in the media business by placing info in the media without paying for it without paying for it directlydirectly

►News release to announce new product launches, company success, etc

►Articles to trade publications/newspapers

►Sponsorship►Charitable donations


PR (contd)PR (contd)

►Defined: “The planned and sustained effort Defined: “The planned and sustained effort to establish and maintain goodwill and to establish and maintain goodwill and mutual understanding between an mutual understanding between an organisation and its publics”organisation and its publics”

► Publics: employees, shareholders, trade Publics: employees, shareholders, trade unions, customers, media, governmentunions, customers, media, government

► Role of PR: identify the relevant publics and Role of PR: identify the relevant publics and to influence their opinions by:to influence their opinions by: Reinforcing favorable opinionsReinforcing favorable opinions Transforming neutral opinions to positiveTransforming neutral opinions to positive Changing/neutralising hostile opinions Changing/neutralising hostile opinions


PR (contd)PR (contd)

►Techniques in PR:Techniques in PR: Consumer communications (thru Consumer communications (thru

promotional videos, press releases etc)promotional videos, press releases etc) Business communications (thru corporate Business communications (thru corporate

identity design, websites, etc)identity design, websites, etc) Internal/employee communications (thru Internal/employee communications (thru

e.g., newsletters)e.g., newsletters) External communications External communications Financial communicationsFinancial communications


Advantages/disadvantages of Advantages/disadvantages of each type:each type:

►See p 294 of your study materialsSee p 294 of your study materials


Adoption & Diffusion Adoption & Diffusion StrategiesStrategies

► Adoption curve: p 336Adoption curve: p 336► Characteristics: p 336-337Characteristics: p 336-337► This curve shows when different groups This curve shows when different groups

accept ideas: accept ideas: Innovators (first 2.5%)Innovators (first 2.5%) Early adopters (next 13.5%) : likely to be young, Early adopters (next 13.5%) : likely to be young,

mobile and creativemobile and creative Early majority (Next 34%) : unlikely to be opinion Early majority (Next 34%) : unlikely to be opinion

leadersleaders Late majority (Next 34%) : are wary of new Late majority (Next 34%) : are wary of new

conceptsconcepts Laggards & non-adapters (Last 16%) : least open Laggards & non-adapters (Last 16%) : least open

to new ideasto new ideas


Matching Promotion to Matching Promotion to Marketing StrategyMarketing Strategy

► Different promotional approaches suitable for different Different promotional approaches suitable for different stages in the PLCstages in the PLC

► Introduction: especially if the product is ground-Introduction: especially if the product is ground-breaking, customers need info on its uses & benefits – breaking, customers need info on its uses & benefits – promote the idea, not necessarily the company’s promote the idea, not necessarily the company’s productproduct

► Once rival products come into the market, promotion Once rival products come into the market, promotion shifts from building primary demand to stimulating shifts from building primary demand to stimulating company’s brandscompany’s brands

► Shift from personal selling to mass sellingShift from personal selling to mass selling► As competition increases, persuasion becomes key As competition increases, persuasion becomes key

promotion objective, hence, mass advertisingpromotion objective, hence, mass advertising► When product’s share of the market is declining – either When product’s share of the market is declining – either

have promotion costs to remain profitable, or can raise have promotion costs to remain profitable, or can raise promotion budget to remain profitablepromotion budget to remain profitable


Matching Promotion to Matching Promotion to Marketing Strategy (contd)Marketing Strategy (contd)

►Market conditions determine which Market conditions determine which elements in the promotional blend the elements in the promotional blend the company concentrates oncompany concentrates on

► In markets approaching perfect In markets approaching perfect competition, price becomes important. competition, price becomes important. Hence, advertising concentrates on Hence, advertising concentrates on value-for-money & sales promotion on value-for-money & sales promotion on discountsdiscounts

►Mix also dictated by company’s financial Mix also dictated by company’s financial resources – ads can be expensiveresources – ads can be expensive

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MKT5 - Slide 1 to 14 1 5. Promotion Strategy MKT5