advertising or personal selling, sales promotions are offered to
intermediaries as well as to ultimate consumers.
•The advantage of sales promotion is that the short-term
nature (such as coupon with expiration date) often
stimulates sales for its duration.
•The disadvantage is that sales gains are often
temporary, and sales drop off after the deal ends. Used
continuously, sales promotions lose their effectiveness.
E. Direct Marketing
Direct marketing uses direct communication with consumers
to generate a response in the form of an order, a request for
further information, or a visit to a retail outlet. Direct
marketing frequently involves interactive communication.
•Advantages are that direct marketing can be
customized to match the needs of specific target
markets. Messages can be developed and adapted
quickly to facilitate one-to-one relationships with
consumers.
•Disadvantages are the need for a comprehensive and
up-to-date database with information about the target
market, which is expensive and time consuming to
create and maintain. Growing concern about privacy
has led to a decline in response rates among some
customer groups. Companies with successful direct
marketing programs are sensitive to these issues and
often use a combination of promotional approaches to
increase value for customers.
III. INTEGRATED MARKETING COMMUNICATIONS
– DEVELOPING THE PROMOTIONAL MIX
A firm’s promotional mix is the combination of one or more
of the promotional elements it chooses to use. Coordinating a
consistent promotional effort is necessary. A promotional
planning process designed to ensure integrated marketing
communications (IMC) can facilitate this goal.
A. The Target Audience
Promotional programs are directed to the ultimate consumer, to
an intermediary (retailer, wholesaler, or industrial distributor),
or to both.
Promotional programs directed to buyers of consumer products
often use mass media because the number of potential buyers
is large. Personal selling is used at the place of purchase.
Direct marketing may be used to encourage first-time or repeat
purchases. Combinations are a necessity for some target
audiences.
Advertising directed to business buyers is used selectively.
Because such buyers often have specialized needs or technical
questions, personal selling is especially important.
Personal selling is also the major promotional ingredient for
intermediaries.
MARKETING NEWSNET
Communicating with Gen Y . . . 29.8 Hours per Day!
Research indicates that consumers have created 29.8-hour days
by using more than one communication medium at the same
time–a behavior often called “multitasking.” Generation Y
seems to be particularly adept at this. This group of consumers
probably doesn’t give its full attention to any single message.
Instead it uses continuous partial attention to scan the media.
Marketers can still communicate with Gen Y by utilizing a
variety of promotional tools–from advertising to packaging to
word-of-mouth communication–with an integrated message.
B. The Product Life Cycle
The composition of the promotional mix changes over the four
product life-cycle stages.
1. Introduction Stage. Informing consumers in an effort
to increase their level of awareness is the primary
objective. All the promotional mix elements are used
at this time.
2. Growth Stage. The primary objective is to persuade
the consumer to buy the product rather than substitutes.
Gaining brand preference and solidifying distribution
are important. The primary promotional tool is
advertising, which stresses brand differences. Personal
selling is used to solidify the channel of distribution.
3. Maturity Stage. To maintain existing buyers,
advertising’s role is to remind buyers of the product.
Sales promotion, direct marketing, and price cuts and
discounts can increase sales.
4. Decline Stage. Little money is spent on the
promotional mix.
C. Product Characteristics
The proper blend of elements in the promotional mix also
depends on the type of product. Three specific characteristics
should be considered: complexity, risk, and ancillary services.
•Complexity refers to the technical sophistication of the
product and hence the amount of understanding
required using it. The more complex the product is,
the greater the emphasis on personal selling.
•Risk for the buyer can be assessed in terms of financial
risk, social risk, and physical risk. Although
advertising helps, the greater the risk, the greater the
need for personal selling.
•Ancillary services pertain to the degree of service or
support required after the sale. Advertising’s role is to
establish the seller’s reputation. Direct marketing can
describe how a product or service can be customized.
However, personal selling is essential to build buyer
confidence and provide evidence of customer service.
D. Stages of the Buying Decision
1. Prepurchase Stage. Advertising is most valuable
because advertising informs potential customers about
the existence of the product and the seller.
2. Purchase Stage. Importance of personal selling is
highest at the purchase stage. Sales promotion can
encourage demand.
3. Postpurchase Stage. The more personal contact after
the sale, the more the buyer is satisfied. Advertising and
personal selling help reduce postpurchase anxiety.
E. Channel Strategies
1. Push Strategy
In a push strategy, the manufacturer directs the
promotional mix to channel members to gain their
cooperation in ordering and stocking the product. Personal
selling and sales promotions play minor roles. The goal is
to get channel members to push the product to their
customers.
2. Pull Strategy
In a pull strategy, the manufacturer directs its promotional
mix at ultimate consumers to encourage them to ask the
retailer for the product. Seeing demand from ultimate
consumers, retailers order the product from wholesalers
and thus the item is pulled through the intermediaries.
F. Integrated Marketing Communications
In the past the promotional elements were regarded as separate
functions handled by experts in separate departments. Today
the concept of designing marketing communications programs
that coordinate all promotional activities–advertising, personal
selling, sales promotion, public relations and direct marketing–
to provide a consistent message across all audiences is referred
to as integrated marketing communications (IMC). In
integrated programs promotional tools are used for different
reasons, and their combined use creates synergy. Another level
of integration is necessary when firms have international
promotion programs.
IV. DEVELOPING THE PROMOTION PROGRAM
Because media costs are high, promotion decisions must be made
carefully, in a systematic approach. Paralleling the planning,
implementation, and control steps of the strategic marketing
process, the promotion decision process is divided into (1)
developing, (2) executing, and (3) evaluating the promotion
program. Development focuses on the four Ws: Who is the target
audience? What are the promotion objectives? budgets? kinds
of promotion to use? Where should the promotion be run? When
should the promotion be run?
A. Identifying the Target Audience
The first decision in developing the promotion program is
identifying the target audience, the group of prospective buyers
toward which a promotion program is directed. The more a firm
knows about its target audience’s profile, the easier it is to develop
a promotion program.
B. Specifying Promotion Objectives
After the target audience is identified, a decision must be reached
on what the promotion should accomplish. Consumers can be said
to respond in terms of a hierarchy of effects, which is the
sequence of stages a prospective buyer goes through from initial
awareness of a product to eventual action (either trial or adoption
of the product).
•Awareness. The consumer’s ability to recognize and
remember the product or brand name.
•Interest. An increase in the consumer’s desire to learn
about some of the features of the product or brand.
•Evaluation. The consumer’s appraisal of the product or
brand on important attributes.
•Trial. The consumer’s actual first purchase and use of the
product or brand.
•Adoption. Through a favorable experience on the first
trial, the consumer’s repeated purchase and use of the
product or brand.
For a totally new product the sequence applies to the entire
product category, but for a new brand competing in an
established product category, it applies to the brand itself.
Regardless of what the specific objective might be, promotion
objectives should possess three important qualities: (1) be
designed for a well-defined target audience, (2) be measurable,
and (3) cover a specified time period.
C. Setting the Promotion Budget
Promotion expenditures needed to reach households are
enormous. After setting promotion objectives, a company can use
various methods to set the promotions budget.
1. Percentage of Sales
In the percentage of sales budgeting approach, funds are
allocated as a percentage of past or anticipated sales, in terms
of either dollars or units sold.
•Advantages are that the approach is simple and
provides a financial safeguard by tying the promotion
budget to sales.
•The disadvantage is that this implies that sales cause
promotion. rather than the other way around. Using
this method, a company may reduce its promotion
budget because of a downturn in sales–a time when it
may need promotion the most.
2. Competitive Parity
Competitive parity budgeting is matching the competitor’s
absolute level of spending or the proportion per point of
market share.
•An advantage is that it is important to consider the
competition.
•The disadvantage is that the competition may have very
different promotional objectives, requiring a different
level of expenditures.
3. All You Can Afford
Common to many small businesses is all-you-can-afford
budgeting, in which money is allocated to promotion only
after all other budget items are covered. Fiscally
conservative, this approach has little else to offer.
C. Setting the Promotion Budget
Promotion expenditures needed to reach households are
enormous. After setting promotion objectives, a company can use
various methods to set the promotions budget.
1. Percentage of Sales
In the percentage of sales budgeting approach, funds are
allocated as a percentage of past or anticipated sales, in terms
of either dollars or units sold.
•Advantages are that the approach is simple and
provides a financial safeguard by tying the promotion
budget to sales.
•The disadvantage is that this implies that sales cause
promotion. rather than the other way around. Using
this method, a company may reduce its promotion
budget because of a downturn in sales–a time when it
may need promotion the most.
2. Competitive Parity
Competitive parity budgeting is matching the competitor’s
absolute level of spending or the proportion per point of
market share.
•An advantage is that it is important to consider the
competition.
•The disadvantage is that the competition may have very
different promotional objectives, requiring a different
level of expenditures.
3. All You Can Afford
Common to many small businesses is all-you-can-afford
budgeting, in which money is allocated to promotion only
after all other budget items are covered. Fiscally
conservative, this approach has little else to offer.
4. Objective and Task
The best approach is objective and task budgeting, whereby
the company (1) determines its promotion objectives, (2)
outlines the tasks to accomplish these objectives, and (3)
determines the promotion costs of performing these tasks.
•Advantages include tying the expenditure to reaching
specific objectives and prioritizing tasks if costs are too
high.
•Disadvantages are that this method requires experience
and judgment. It may require extensive reworking to
meet budgets.
D. Selecting the Right Promotional Tools
Once a budget has been set, the combination of the five basic
IMC tools–advertising, personal selling, sales promotion, public
relations, and direct marketing–can be specified. The promotion
mix can vary from a simple program using a single tool to a
comprehensive program using all forms. At this stage, it is also
important to assess the relative importance of the various tools.
E. Designing the Promotion
The design of the promotion will play a primary role in
determining the message that is communicated to the audience.
This design activity is frequently viewed as the step requiring the
most creativity. One of the challenges of IMC is to design each
promotional activity to communicate the same message.
F. Scheduling the Promotion
Once the design of promotional elements is complete, it is
important to determine the most effective timing of their use.
The promotion schedule describes the order in which each
promotional tool is introduced and the frequency of its use during
the campaign. Factors such as seasonality and competitive
promotion activity can influence the schedule.
V. EXECUTING AND EVALUATING THE PROMOTION
PROGRAM
To fully benefit from IMC programs, companies must create and
maintain a test-result database that allows comparisons of the
relative impact of the promotional tools and their execution
options, in varying situations. Information from the database will
allow informed design and execution decisions and provide
support for IMC activities during internal reviews by financial or
administrative personnel.
Carrying out the promotion program can be expensive and time
consuming. The higher the income of the company, the longer it
takes to fully implement an IMC program. The trend is clearly
toward a long-term perspective in which all forms of promotion
are integrated.
VI. DIRECT MARKETING
A. The Growth of Direct Marketing
The ability to customize communication efforts and create one-to-one
interactions is appealing to most marketers, particularly those
with IMC programs. In recent years, direct marketing growth (in
terms of spending, revenue generated, and employment) has
outpaced total economic growth. Continued growth in the number
of consumers with Internet access and the number of businesses
with websites and electronic commerce offerings is likely to
contribute to the future growth of direct marketing.
B. The Value of Direct Marketing
Consumers report many benefits from direct marketing: they
don’t have to go to a store, they can usually shop 24 hours a day,
they save time, they avoid hassles with salespeople, they can save
money, it is fun and entertaining, and it offers more privacy than
in-store shopping. Strong elements of customer service such as
toll-free telephone numbers, representatives with access to
information about purchase preferences, overnight delivery
services, and unconditional guarantees all help create value for
customers.
The value of direct marketing for sellers can be described in terms
of the responses it generates: Direct orders are the result of offers
that contain all the information necessary for a prospective buyer
to make a decision to purchase and complete the transaction.
Lead generation is the result of an offer designed to generate
interest in a product or service and a request for additional
information. Traffic generation is the outcome of an offer
designed to motivate people to visit a business.
C. Technological, Global, and Ethical Issues
in Direct Marketing
Databases are the result of organizations’ efforts to collect
demographic, media, and consumption profiles of customers so
that direct marketing tools can be directed at specific customers.
To translate into information, data must be unbiased, timely,
pertinent, accessible, and organized in a way that helps the
marketing manager make decisions that lead to direct marketing
actions. Some data must be collected in consumers’ homes; other
data are available from businesses. Technology such as optical
scanners helps collect data with as little intrusion on the customer
as possible.
The global growth of direct marketing may also depend on
technology. Reliable physical delivery is necessary, and payment
is an issue. Because fewer consumers have credit cards,
alternatives such as C.O.D. and bank deposits are needed..
Direct marketers face challenging ethical issues. Such direct
marketing activity as telephone calls during the dinner hour has
drawn much attention. Another issue, the proliferation of e-mail
advertising, is of increasing concern to consumers and marketers.
Legislatures are also taking an interest, with input from consumers,
governments, and direct marketing associations.
