When you finish this chapter, you should: Know the advantages and disadvantages of the promotion methods a marketing manager can use in strategic planning, know how the communication process affects promotion planning, understand how direct-response promotion is helping marketers develop more targeted promotion blends,...
Chapter 14: Promotion — Introduction to Integrated Marketing Communications For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 14 Objectives When you finish this chapter, you should 1. Know the advantages and 6. Understand how new customer disadvantages of the promotion initiated interactive communication methods a marketing manager can is different use in strategy planning 7. Know how typical promotion plans 2. Understand the integrated marketing are blended to get an extra push communications concept and why from middlemen and help from most firms use a blend of different customers in pulling products promotion methods through the channel 3. Understand the importance of 8. Understand how promotion blends promotion objectives. typically vary over the adoption curve and product life cycle 4. Know how the communication process affects promotion planning 9. Understand how to determine how much to spend on promotion 5. Understand how directresponse efforts promotion is helping marketers develop more targeted promotion 10. Understand the important new blends terms 142 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Basic Promotion Methods Target Market Product Place Personal Selling Promotion Mass Selling Advertising Price Sales Promotion Publicity Exhibit 141 143 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales Promotion Activities Aimed at final consumers or users Contests Coupons Aisle displays Samples Trade shows Pointofpurchase materials Banners and streamers Trading stamps Sponsored events Exhibit 142 144 Aimed at middlemen Price deals Promotion allowances Sales contests Calendars Gifts Trade Shows Meetings Catalogs Merchandising aids Aimed at company’s own sales force Contests Bonuses Meetings Portfolios Displays Sales aids Training materials For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Promotion and the Demand Curve Price D1 D2 Quantity Promotion efforts may be targeted to make demand for the firm’s products more inelastic and so more resistant to countermoves by the competition A To be more inelastic Exhibit 143A 145 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Promotion and the Demand Curve Price D D Quantity Promotion efforts may be targeted to increase the demand for the firm’s products B to the right Exhibit 143B 146 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Promotion and the Demand Curve Price D D Quantity Promotion efforts may be targeted to both increase demand for the firm’s products and to make demand more inelastic C Both to the right and more inelastic Exhibit 143C 147 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Promotion and the Demand Curve Price Price Price D1 D D2 148 D D Quantity A To be more elastic Exhibit 143 D Quantity B to the right Quantity C Both to the right and more elastic For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Promotion and the AIDA Model Promotion Objectives Informing Persuading Reminding Adoption Process AIDA Model Awareness Interest Evaluation Trial Decision Confirmation Attention Interest { } Desire } Action Exhibit 144 149 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Traditional Communication Model Source Encoding Message channel Decoding Receiver Noise Feedback Exhibit 145 1410 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Message Interpretation Encoder The same message may be interpreted differently by the encoder and the decoder Common frame of reference Decoder Exhibit 146 1411 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Customer-Initiated Interactive Communication Receiver (Customer) Source’s Message Noise Select a topic Search Message channel Exhibit 147 1412 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Push-Pull Strategies Producer’s Promotion Blend Exhibit 148 1413 Wholesaler Promotion Push Promotion to Channel Members Wholesaler Promotion Push Retailer Promotion Push Business Customer Pull Promotion to Final Customers Promotion to Business Customers Personal Selling, Sales Promotion, Advertising, Publicity Final Consumer Pull For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Adoption Curve Innovators (3-5%) Percent Adoption 90 Early Adopters (10-15%) Early Majority (34%) Late Majority (34%) Laggards/ Nonadopters (5-16%) 50 20 Exhibit 149 1414 Time For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Setting the Promotion Budget ???? ???? ???? ???? ???? 1415 Percentage Percentage of of Sales Sales Match Match Competitors Competitors Per Per Unit Unit Uncommitted Uncommitted Resources Resources Task Task Method Method For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Terms Promotion Personal Selling Mass Selling Advertising Publicity Sales Promotion Sales Managers Advertising Managers Public Relations Sales Promotion Managers Integrated Marketing Communications AIDA Model Communication Process Source 1416 Receiver Noise Encoding Decoding Message Channel Pushing Pulling Adoption Curve Innovators Early Adopters Early Majority Late Majority Laggards Nonadopters Primary Demand Selective Demand Task Method For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill ... Innovators ( 3-5 %) Percent Adoption 90 Early Adopters (1 0-1 5%) Early Majority (34%) Late Majority (34%) Laggards/ Nonadopters ( 5-1 6%) 50 20 Exhibit 14 9 14 14 Time For use only with Perreault and McCarthy. .. Message Noise Select a topic Search Message channel Exhibit 14 7 14 12 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Push-Pull Strategies... Displays Sales aids Training materials For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Promotion and the Demand Curve Price D1 D2 Quantity