Marketing -- Week 8
Chapters XVI and XVII
Chapter XVI
ADVERTISING AND SALES PROMOTION
ADVERTISING, SALES PROMOTION, AND MARKETING STRATEGY DECISIONS

Marketing managers must decide:

International Dimensions are Important Cultural, social and behavioral influences may limit what kind of advertising message can be shown
 
IMPORTANCE OF ADVERTISING

1995 -- expenditures: $200 billion

US corporations spend 2.5% of sales dollar on advertising

% is smaller for retailers than producers

For spending data, see Exhibit 16-2

Amount spent for various mediums

 
ADVERTISING OBJECTIVES ARE A STRATEGY DECISION

Advertising objectives must be specific:

· Help introduce new products

· Help position brand (inform, persuade, remind)

· Help obtain outlets

· Provide ongoing contact

· Prepare way for sales people

· Get immediate buying action

· Help maintain relationships

Need specific objectives for each ad and ad campaign
 
 

OBJECTIVES DETERMINE THE KINDS OF ADVERTISING NEEDS

Product advertising: tries to sell product Institutional adverting: tries to promote organization’s image, reputation, or ideas

1) Product Advertising

· Pioneering: develops primary demand for product category rather than brand (inform)

· Competitive: selective demand for specific brand (direct -- immediate buying action/indirect -- affects future buying action · Comparative advertising: makes specific brand comparisons

· Reminder advertising: tries to keep product’s name before the public
 
 

COORDINATING ADVERTISING EFFORTS WITH COOPERATIVE EFFORTS BY:

Offering advertising allowances: price reductions
Cooperative advertising: for middlemen, producers -- they share in the cost of the ads, encouraging franchises to use common advertising program
 
 

CHOOSING THE BEST MEDIUM -- HOW TO DELIVER THE MESSAGE

Depends on:

 
  • For pro’s and con’s, see exhibit 16-4
  • Specify objectives
  • Less developed countries -- radio
  • Some media helps zero in on specific target markets, e.g., specialty type magazines
  • Interactive cable TV
  • Internet

    •  
    PLANNING THE BEST MESSAGE “WHAT TO COMMUNICATE”

    The AIDA Model

    · Attention: Large headlines, etc.

    · Interest: Relate ads to specific moods/emotions/demonstrate benefits

    · Desire: Product comparisons, testimonials

    · Action: Direct response, toll free number, etc.
     
     

    AD AGENCIES OFTEN DO THE WORK

    Ad agencies are specialists in handling/planning mass selling details (see exhibit 16-5)

    Average commission: 15% on media and production costs
     
     

    SALES PROMOTION

    (See exhibit 16-6)

    Sales promotion: Those promotion activities other than advertising, publicity, and personal selling that stimulate interest, trial, or purchase by the final consumer.

    $240 billion/yr. is spent on sales promotion

    Different types of sales promotion are needed for different target audiences.
     
     


     
    Chapter XVII
    PRICING OBJECTIVES AND POLICIES
    PRICE HAS MANY STRATEGY DIMENSIONS

    Pricing policies should explain:

    · How flexible prices will be

    · At what level they will be set over the product life cycle

    · To whom and when discounts and allowances will be given

    · How transportation costs will be handled

    See exhibits 17-2 and 17-3
     
     

    PRICING OBJECTIVES

    See exhibit 17-4

    Profit oriented objectives:

    · Target return: specific level of profit, e.g. ROI of 15%

    · Maximize profits: charge what the traffic can bear

    Sales oriented objectives:

    · Sales growth: focus on sales only

    · Market share: focus on share only

    Status quo pricing objectives:

    · Meet competition: discourages price competition

    · Nonprice competition: focus on other P’s
     
     
     

    MOST FIRMS SET SPECIFIC PRICING POLICIES TO REACH OBJECTIVES

    Administered prices: firms set their own prices

    Price flexibility prices:

    · One price policy: one price to all customers

    · Flexible price policy: same product to different customers at different prices. e.g. car dealers
     
     

    PRICE LEVEL POLICIES OVER THE PRODUCT LIFE CYCLE

    · Skimming price policy: high price/inelastic demand (See exhibit 17-5)

    · Penetration: sell whole market at one low price -- discourages competition.

    · Introductory price dealing: temporary price cuts to speed product in a market

    · Value pricing: setting a fair price level for a marketing mix that gives customers what they need
     
     

    DISCOUNT POLICIES

    · Quantity discounts: encourages customer to buy in large amounts

    · Cumulative quantity discounts: encourages repeat buying

    · Seasonal discounts: encourages buyers to buy earlier

    · Trade discount: list price to channel members for job they are going to do

    · Sale price discount: temporary discount from list price

    · Advertising allowances: price reductions given to channel members to advertise

    · Stocking allowances: use to get shelf space

    · Push money: money used to get sales rep/clerks to push product

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