Promotions Decisions • Elements in the communication process Product • Promotions mix management • The promotions message • Executions style Product • Media choice? instruments • Promotional objectives Lecture 10

Elements in the Communication Process Elements in the Communication Process Sender Encoding Message Decoding Receiver Media • Sender - party sending the message • Encoding - message in symbolic form • Message - word, pictures and symbols that the sender transmits

Noise • Media - the communication channel e.g radio

Feedback Response Elements in the Communication Process Promotional objectives • Decoding - receiver assigns meaning to • To support increases symbols encoded by the sender • To encourage trial • Response - reaction of the receiver after • To create awareness being exposed to the to the message • To inform about a feature or benefit • Feedback - the part of the receiver’s response after being communicated to the • To remind sender • To reassure • Noise - unplanned static or distortion • To create an image during the communication process e.g. • To modify attitudes competitor action (Creature Comforts?)

Promotions Mix Promotions Mix – tools and - traditional view instruments • • • Telemarketing • • Direct mail • Personal selling • Trade fairs and exhibitions • Public relations • Commercial television • Newspapers and magazines • Radio • Cinema • Point of sale displays • Packaging The Promotions Mix - Sales Promotion Opportunities 1. Sales promotion and requirements

• Sales promotion tend to be thought of as • Increase in sales by providing extra incentive to being all promotions apart from advertising, purchase. May focus on resellers (push), consumers personal selling, and public relations. (pull) or both. • It covers wide range of methods and • Objectives must be consistent with promotional instruments. objectives and overall company objectives. • Some instruments are sometimes mentioned as • Balance between short term sales increase and intependent promotion mix part (merchandising, long term need for desired reputation and • Examples of Sales promotion instruments: image . – BOGOF promotion, or Buy One Get One Free, couponing, • Attract customer traffic and maintain brand/company money - off promotions, competitions, free accessories (such as free blades with a new razor), introductory loyalty. offers (such as buy digital TV and get free installation), • Reminder functions (calendars, T Shirts, match books and so on. etc.) • Each sales promotion should be carefully costed • Impulse purchases increased by displays contests and compared with the next best alternative. generate excitement esp. with high payoffs.

Sales Promotion Limitations Sales Promotion Methods • Consumer Sales Promotion Techniques - • Consumers may just wait for the encourage/stimulate customers to patronize a specific incentives store or to try a specific product . • Coupons: Usually reduce the purchase price or • May diminish image of the firm, offered as cash. Need to state the offer clearly represent decline in the product and make it easy to recognize . quality. – Stores/marketers are honoring competitors • Reduces profit margins, customers coupons etc. – Stores often don't have enough of the may stock up during the promotion. couponed item in stock. • Shift focus away from the product • Demonstrations: Excellent attention getters. itself to secondary factors, therefore Labor costs are usually high. no product differential advantage. Sales Promotion Sales Promotion Methods Methods • Frequent User Incentives: • Free Samples: – Stimulate trial of product. Increase sales – Major airlines, helps foster customer volume at the early stage of the product life loyalty to a specific company. Credit cycle and obtain desirable . card companies. Trading stamps - Co - ops Most expensive sales promotion technique. back in England, foster retail loyalty. Not appropriate for mature products and slow • Point of Purchase Display: turnover products. • Money Refunds/Rebates: – Outside signs, window displays, counter – Submit proof of purchase and mail specific pieces, display racks. 90% of retailers refund, usually need multiple purchase for believe that point of purchase materials refund. Helps promote trial use, due to the sell products. complexity of the refund, it has little impact. Customers have a poor perception of rebate – Essential for product introductions. Also offered products. Used extensively in the Auto with 2/3 of purchasing decisions made and Computer industry. in the store, they are important

Sales Promotion Sales Promotion Methods • Items: Methods – Offered free or at minimum cost as a bonus. Used to attract competitors customers, • Consumer Contests and Sweepstakes: different sizes of established products. – Consumers compete based on their Gas stations give free glasses -- basics buy!! analytical or creative skills. Must be McDonalds premium items are considered accurate or you will anger collectors items by some! customers/retailers. Flintstones program with McDonalds. Sweepstakes are prohibited in some Burger King with the Lion King movie states. Casper with Pepsi, Pizza Hut, Choice Hotels, Batman Forever with McDonalds, Kelloggs, Six Flags, pocahontas with Chrysler, Nestle,General Mills, Burger King, • Cents - off Offer: – Strong incentive for trying a product - very similar to coupons, but are a part of the package. Sales Promotion Sales Promotion Methods Methods • Trade Sales Promotion • Allowances and Discounts: Techniques. • Merchandise...reimburse for extra retail • Push Policy emphasizes promotions support, i.e. advertising, shelf space. focused on the next intermediary. • Case...discount on cases ordered in Trade Sales Promotion Techniques - specific period. stimulate wholesalers and retailers to • Finance...Paying for financial costs/losses associated with consumer sales carry products and to market them promotions. aggressively. Producers use sales promotion • Cooperative Advertising: – Manufacturer agrees to pay a certain amount techniques to encourage resellers to of retailers media. carry their products and to promote – Training of Sales Staff. them more effectively .

The Promotions Mix Advertising • 6. Advertising • Definition: • Advertising is a 'paid for' communication. Paid form of non personal It is used to develop attitudes, create communication about an awareness, and transmit information in organization or its products that is order to gain a response from the . There are many advertising transmitted to a target audience 'media' such as newspapers (local, through a mass/broadcast medium. national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides). Advertising • Pros Advertising – Flexibility allows you to focus on a small, precisely defined segment (School • Cons newspapers) or a mass market (baseball show = Males, 35 - 50). – Absolute $ outlay very high, – Cost efficient - reach a large number at a low – Rarely provides quick feedback, or cost per person, allows the message to be repeated, and can improve public image. necessarily any feedback – Allows for repeating the message - lets the – Less persuasive than personal selling buyer receive and compare the messages of – Audience does not have to pay attention various competitors. – Very expressive, allows for dramatization. – Indirect feedback (without interactivity) – Also used to build a long term image of a product. – Trigger quick sales, Sears advertising a weekend sale.

Advertisements are important for: The Promotional Message • standardized products Grab ATTENTION • products aimed at large markets Excite INTEREST • products that have easily communicated features Create DESIRE • products low in price Prompt ACTION • products sold through independent AIDA channel members and/or are new. Execution styles Media choice? • Slice of life e.g. Axe? • Lifestyle e.g. After Eight mints • objectives • Fantasy e.g. Margot • Definition of problem e.g falling • Mood or image e.g. Timotei shampoo • Musical e.g . ??? awareness • Personality symbol e.g. Richard Branson • Evaluation of different tools • Technical expertise e.g.Vorsprung durch Technik - Audi • choice of optimum mix of • Scientific evidence e.g. Vichy promotional methods • Testimonial evidence e.g. Calgonit • Integration into overall marketing communication programme

The Promotions Mix The Promotions Mix • 1. Personal Selling • 3. Public Relations (PR) • Personal Selling is an effective way to • Public Relations is defined as 'the manage personal customer relationships. deliberate, planned and sustained effort to establish and maintain mutual The sales person acts on behalf of the understanding between an organization organization. They tend to be well trained and its publics' (Institute of Public in the approaches and techniques of Relations). personal selling. However sales people are • It is relatively cheap, but certainly not very expensive and should only be used cheap. Successful strategies tend to be where there is a genuine return on long - term and plan for all eventualities. All investment. For example salesmen are airlines exploit PR; just watch what often used to sell cars or home happens when there is a disaster.The pre - improvements where the margin is high. planned PR machine clicks in very quickly with a very effective rehearsed plan. The Promotions Mix The Promotions Mix • 4. Direct Mail • 5. Trade Fairs and Exhibitions • Direct mail is very highly focussed upon targeting consumers based upon a database. As with all • Such approaches are very good for marketing, the potential consumer is 'defined' making new contacts and renewing old based upon a series of attributes and similarities. ones. Companies will seldom sell much at Creative agencies work with marketers to design such events. The purpose is to increase a highly focussed communication in the form of a mailing. The mail is sent out to the potential awareness and to encourage trial. They consumers and responses are carefully offer the opportunity for companies to monitored. For example, if you are marketing meet with both the trade and the medical text books, you would use a database of doctors' surgeries as the basis of your mail shot. consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events.

The Promotions Mix Definition of • 7. Sponsorship • Inclusion of branded products, logos, or • Sponsorship is where an organization pays insignia in a movie, TV show, or other media (including music videos, novels, and to be associated with a particular event, videogames). cause or image. Companies will sponsor • Plug versus Placement: sports events such as the Olympics or – a “plug” is an on - camera mention of a Formula One. The attributes of the event brand, usually delivered by a celebrity. – Placement usually integrates a brand into a are then associated with the sponsoring scene or story line. organization. • The elements of the promotional mix are then integrated to form a unique, but coherent campaign. Pervasiveness of placements Catalysts for product • Product placements placement amounted to $2.21 • As much as 75 billion in 2005 (Lazar, percent of all prime • Channel surfing, flipping 2006). time scripted shows • Advent of TIVO and DVRs • In 2005, there were on U.S. television 108,000 instances of include some element • Fragmented Media: Cable & satellite product placement in of brand placement channels, , etc. TV Shows; a 30% (Consoli, 2004). • Economical: production costs for increase from 2004 • Example: Mac/Apple: commercials far exceed placements • La Ferle & Edwards During the first 4 • Permanence: A placement is forever, (2006) found 1 months of 2006, TV placement per 3 including the DVD release minutes of prime - time shows mentioned or TV programming showed Apple products at least 250 times.

Types of placements Theoretical frameworks

• Visual: a branded product serves as a prop in • Mere exposure: repeated exposure to a brand the scenery or background increases liking for the brand • Audible: A character refers to a brand by name • Associative networks: the images and • Use: A character uses a product associations with the characters or story “rubs • Integrated: the brand is integrated into the of” on the brand story line. • Psychological reactance: movie - goers might – Integrated placements are the most effective rebel if they think their freedom to avoid • Virtual placements: (digitally added after the fact) advertising is being restricted Placements may be Studies on placements overrated

• Brand placement had a significant effect on • “a lot of the placements are just going to brand image (Reijmeersdal, Neijens, & Smit, 2007) pass people by” Romaniuk, 2008) • Placements can be effective even if they • About 70% of visual exposures were less are not consciously recalled (Reijmeersdal, than five seconds Neijens, & Smit, 2007) • 41% of brand placements in reality shows • Example: Pontiac sold 1,000 Solstices within an hour after the car was featured were ``slightly obscured'' on an episode of The Apprentice in April 2005.

Newer forms of placement Reactions to placements • Madison Avenue is • Sheth & Sisodia (2005) 60% of consumers scrambling to place believe that marketing and advertising is “out of anywhere and everywhere – Board games: Monopoly now features control.” playing pieces molded in the image of McDonald's french fries, a Toyota Prius, • However, consumers (69%) report they don’t a Motorola cell phone, and a Starbucks particularly mind product placements, unless they mug. are disruptive – Children’s books: M&M's sells book to help teach counting skills to preschoolers • Placements may add to realism, verisimilitude – Music: In the top 20 songs of 2005, Mercedes - Benz was mentioned 100 times, Nike 63, Cadillac 62, Bentley 51, and Rolls - Royce 46. – Prescription drugs: According to Neilson, there were 337 visual or audio mentions of Prescription drugs in 2006 – Eggs: CBS hired EggFusion, an "on - egg messaging" company, to print its logo on 35 million eggs. Word - of - mouth (WOM) • Person - to - person communication between • WOM can be a receiver and a source whom the receiver perceives as non - commercial , regarding – In person a product, service or brand – Phone • Highly effective method of communicating – Mail information – Internet • Particularly effective in communicating negative information • WOM can be – Dissatisfied customer will tell 9 others – Verbal – 13% of unhappy customers will tell >20 others – Visual

Opinion leadership • The process by which one person -- the • Opinion leadership tends to be opinion leader -- informally influences category specific the actions or attitudes of others who may be opinion seekers or opinion recipients • Individual who is an opinion leader • Who are opinion leaders? in one product category may be an opinion receiver in another product • Can they be recognized by any distinctive characteristics? category • Can they be reached through specific • Profile of opinion leaders is likely to media be influenced by the specific product category Generalized attributes of opinion leaders Diffusion of Innovations • Tend to be consumer innovators • Willing to talk about products and services • Self - confident • Outgoing and gregarious • Same age as opinion seeker • Same social status as opinion seeker

Overlap of opinion Opinion leadership process leadership • Opinion leadership is a very powerful • Opinion leadership tends to overlap force across certain combinations of interest areas • Credibility • Overlap is likely to be highest among • Particularly credible in negative product categories that involve comments similar interests The motivation of opinion leaders 1. Self - involvement 1. Self - involvement • Satisfies some basic need of their 2. Product involvement own 3. Social or ”other” involvement • Attention 4. Message involvement • Status • Awareness of expertise • Confirm own good judgment and eradicate post - purchase doubts

3. Social or “other” 2. Product involvement involvement • The greater a person’s involvement • Opinion leaders motivated by ‘other with a particular product, the greater involvement’ share information as an their interest in sharing information expression of friendship, neighborliness and love Marketing implications of 4. Message involvement W.O.M. • Pervasiveness of advertising in our • Marketers look for opportunities to society encourages message encourage word of mouth involvement • Product designers sometimes • Individuals who are bombarded by develop their products to maximize commercial messages and slogans word of mouth potential tend to discuss them and the • Strong, favorable word of mouth products they are designed to sell minimizes the company’s advertising budget

Stimulating opinion Simulating opinion leadership leadership • Teaser campaigns • Slice of life commercials where – Ads that disclose just enough actors portray consumers or information to pique consumers’ professionals discussing a product interests • Testimonials from celebrities are – the ad itself becomes the basis for influential, especially where the discussion, leading to interest in the celebrity is connected in some way to product the product • Buzz marketing • Product placement What is Buzz Marketing? Also known as: • A form of marketing where the consumer doesn’t know he or she is being marketed • Undercover marketing to • Stealth marketing • Generally, a marketing company pays an • Under the radar marketing actor or socially adept person ( opinion • Diffusion marketing leader ) to use a product visibly and convincingly in locations where target • Ambient marketing consumers congregate • Viral marketing (on the web) • The actor talks up the product to people • Product seeding they befriend, handing out samples if it is economically feasible • Roach baiting (to its critics)

Why is it growing so rapidly? • Influentials 1. Buzz is cheap • Trend - translators 2. The rise of the internet makes • Connectors contact with millions of consumers • Alphas possible • Hubs 3. Appeals to younger consumers skeptical of mass media advertising • Sneezers 4. Presents opportunities for products • Bees like cigarettes and alcohol • Magic people Ethically, what’s wrong with What are the down sides? buzz marketing? 1. Difficult to measure reach and • Consumers don’t know they’re being subjected to a success commercial message • Thus don’t view the message with the suspicion 2. Backlash when people realize they would ordinarily apply to a commercial they’ve been deceived message • Marketers often engage children/teens to influence 3. May eventually be overdone and purchase behavior of other children/teens become ineffective • Practice is totally unregulated 4. Less effective for “low - involvement” • Word of Mouth Marketing Association has drafted products ethics code • Code is voluntary • Criticized for being vague

What is “cool hunting”? • “Reverse marketing” • Cool hunters are looking for the 20% of the population who influence the • “Sell - back” remaining 80% • Focuses on teen market • “Culture spies” visit malls and other places – 32 million teens in the US where kids hang out • Attempt to identify trends (e.g., clothing) – Largest demographic group ever before they develop (outnumber baby boomers) • Sell the information to marketers – Spend $100 billion per year • Marketers use the information to design – Influence $150 billion in spending per products that appeal to youth market year • Trucker hats • Pabst Blue Ribbon • Miller High Life • Heavy metal music • “the white trash culture” vs. “designer culture”

• Lawn bowling • Camping • Knitting