ADVERTISING, SALES PROMOTION, PUBLIC RELATIONS, PERSONAL SELLING, AND DIRECT MARKETING

ADVERTISING, SALES PROMOTION, PUBLIC RELATIONS, PERSONAL SELLING, AND DIRECT MARKETING

CHAPTER 10

THE EFFECTS OF ADVERTISING

Discuss the effects of advertising on market share and consumers

THE EFFECTS OF ADVERTISING U.S. advertising was almost $300 billion in 2006 In 2005, 32 companies spent over $1 billion each The advertising industry is small—only 155,000 employed by the 12,000 advertising agencies Ad budgets of some firms are almost $4 billion annually

THE EFFECTS OF ADVERTISING Top Top Ten Ten Leaders Leaders by by U.S. U.S. Advertising Advertising Spending Spending

ADVERTISING AND MARKET SHARE New brands with a small market share spend proportionally more for advertising and sales promotion than those with a large market share 1.

Beyond a certain level of spending, diminishing returns set in. New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits.

2.

THE EFFECTS OF ADVERTISING ON CONSUMERS The average U.S. citizen is exposed to hundreds of ads each day. Advertising may change a consumer’s negative attitude toward a product, or reinforce a positive attitude. Advertising can affect consumer ranking of a brand’s attributes.

EFFECT OF ADVERTISING Maintain Maintain brand brand awareness awareness & & Increase Increase market market share. share.

Measure Measure impact impact on on purchase purchase of of products. products.

Transform Transform Negative Negative attitude attitude toward toward aa product product into into aa positive positive one. one.

Reinforce Reinforce positive positive attitudes attitudes about about brand. brand.

EFFECT OF ADVERTISING Increase consumers rank on brand attitude.

Pre-selling Pre-selling aa Product. Product.

Introducing Introducing New New Products. Products.

Building Building Goodwill. Goodwill.

REVIEW LEARNING OUTCOME EFFECTS OF ADVERTISING

MAJOR TYPES OF ADVERTISING

Identify the major types of advertising

MAJOR TYPES OF ADVERTISING Institutional Advertising

Enhances a company’s image rather than promotes a particular product.

Product Advertising

Advertize the benefits of a specific good or service.

MAJOR TYPES OF ADVERTISING

Institutional Institutional Advertising Advertising

Corporate Corporateidentity identity

Advocacy Advocacy advertising advertising

Pioneering Pioneering

Product Product Advertising Advertising

Competitive Competitive Comparative Comparative

PRODUCT ADVERTISING Pioneering Pioneering

Competitive Competitive

Comparative Comparative

 Stimulates primary demand for new product or category  Used in the PLC introductory stage  Influences demand for brand in the growth phase of the PLC  Often uses emotional appeal  Compares two or more competing brands’ product attributes  Used if growth is sluggish, or if competition is strong

REVIEW LEARNING OUTCOME THE MAJOR TYPES OF ADVERTISING

CREATIVE DECISIONS IN ADVERTISING

Discuss the creative decisions in developing an advertising campaign

CREATIVE DECISIONS IN ADVERTISING

Advertising Campaign

A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals.

CREATIVE DECISIONS IN ADVERTISING Determine the advertising objectives

Make creative decisions

Make media decisions

Evaluate the campaign

SETTING OBJECTIVES: THE DAGMAR APPROACH Define Define target target audience audience

Define Define desired desired percentage percentage change change

Define Define the the time time frame frame for for change change

CREATIVE DECISIONS Identify Identify product product benefits benefits Develop Develop and and evaluate evaluate advertising advertising appeals appeals Execute Execute the the message message Evaluate Evaluate the the campaign’s campaign’s effectiveness effectiveness

IDENTIFY PRODUCT BENEFITS

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

“Sell the Sizzle, not the Steak”

Sell product’s benefits, not its attributes 

A benefit should answer “What’s in it for me?”



Ask “So?” to determine if it is a benefit

IDENTIFY PRODUCT BENEFITS

Attribute

“Powerade’s new line has been reformulated to combine the scientific benefits of sports drinks with B vitamins and to speed up energy metabolism.”

Benefit

“So, you’ll satisfy your thirst with a great-tasting drink that will power you throughout the day.”

ADVERTISING APPEALS Profit

Product saves, makes, or protects money

Health

Appeals to body-conscious or health seekers

Love or romance Fear

Used in selling cosmetics and perfumes

Social embarrassment, old age, losing health

Admiration

Reason for use of celebrity spokespeople

Convenience

Used for fast foods and microwave foods

Fun and pleasure Key to advertising vacations, beer, parks Vanity and egotism Used for expensive or conspicuous items Environmental Consciousness

Centers around environmental protection

UNIQUE SELLING PROPOSITION

Unique Selling Proposition

A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign.

EXECUTING THE MESSAGE

REVIEW LEARNING OUTCOME CREATIVE DECISIONS FOR AD CAMPAIGN Set advertising objectives

Identify benefits Develop appeal

Evaluating results helps marketers adjust objectives for future campaigns

Execute message

Evaluate campaign results

MEDIA DECISIONS IN ADVERTISING

Describe media evaluation and selection techniques

MEDIA DECISIONS IN ADVERTISING Monitored Monitored Media Media

Unmonitored Unmonitored Media Media

Newspapers Newspapers

Direct Direct Mail Mail

Magazines Magazines

Trade Trade Exhibits Exhibits

Yellow Yellow Pages Pages

Cooperative Cooperative Advertising Advertising

Internet Internet

Brochures Brochures

Radio Radio

Coupons Coupons

Television Television

Catalogs Catalogs

Outdoor Outdoor Media Media

Special Special Events Events

MAJOR ADVERTISING MEDIA Newspapers Newspapers Magazines Magazines Radio Radio Television Television Outdoor Outdoor Media Media Yellow Yellow Pages Pages Internet Internet

NEWSPAPERS Advantages      

Geographic selectivity Short-term advertiser commitments News value and nearness High individual market coverage Co-op and local tie-in availability Short guide time

Disadvantages

  

Limited demographic selectivity Limited color May be expensive

FREE NEWSPAPERS? 

The new Baltimore Examiner is delivering 250,000 newspapers—at no charge and unsolicited!



Advertising brings in the revenue for this niche publication targeting households with income of $73,000 or more.

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The ads are $2,900 for a full page, compared with $17,000 for its competition, the Baltimore Sun.

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The Examiner is betting that low ad rates and the target market will be a valuable proposition to advertisers. SOURCE: Joseph T. Hallinan, “Do New Free Dailies Mean Sun is Setting for Paid Newspapers?,” Wall Street Journal, April 5, 2006, B1.

COOPERATIVE ADVERTISING

Cooperative Advertising

An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand.

MAGAZINES Advantages

Disadvantages 



Good reproduction

Long-term advertiser commitments



Demographic selectivity 



Regional/local selectivity

Slow audience buildup



Long advertising life



High pass-along rate

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Limited demonstration capabilities

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Lack of urgency

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Long lead time

RADIO Advantages

Disadvantages 

No visual treatment

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Low cost

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Short advertising life

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Immediacy of message

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Short notice scheduling

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No seasonal audience change

High frequency to generate comprehension and retention

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Background distractions

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Commercial clutter

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Highly portable



Short-term advertiser commitments

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Entertainment carryover

TELEVISION      

Advantages Wide, diverse audience Low cost per thousand Creative opportunities for demonstration Immediacy of messages Entertainment carryover Demographic selectivity with cable

Disadvantages       

Short life of message Consumer skepticism High campaign cost Little demographic selectivity with stations Long-term advertiser commitments Long lead times for production Commercial clutter

TV ADVERTISING: IS LESS MORE?

The media is cluttered and consumers change channels or speed through commercials on a DVR.

35

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The number of ads in TV shows is a longstanding complaint of viewers and advertisers. 05 04

Year



03 02 01

2000



Tests are being conducted to feature shorter commercial pods.

13.5

14

14.5

15

15.5

Commercial Minutes per Hour

SOURCE: Suzanne Vranica, “TV-Ad Test to Show if Less is More,” Wall Street Journal, April 5,2006, B3.

OUTDOOR MEDIA Advantages

Disadvantages

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Repetition

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Short message

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Moderate cost

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Flexibility

Lack of demographic selectivity



Geographic selectivity



High “noise” level

INTERNET Advantages 

Fast growing



Ability to reach narrow target audience

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Short lead time

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Moderate cost

Disadvantages 

Difficult to measure ad effectiveness and ROI



Ad exposure relies on “click through” from banner ads



Not all consumers have access to Internet

ALTERNATIVE MEDIA Shopping Shopping Carts Carts Computer Computer Screen Screen Savers Savers

Floor Floor Ads Ads

DVDs DVDs

Subway Subway Tunnel Tunnel Ads Ads

Interactive Interactive Kiosks Kiosks

Video Video Game Game Ads Ads

Ads Ads in in Movies Movies

Cell Cell Phone Phone Ads Ads

Advertainments Advertainments

VIDEOGAME ADVERTISING 

Microsoft plans to acquire Massive inc., a start-up that places ads in video games.

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Ads are inserted into the game environment.

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Video games could become a large new medium for advertising. SOURCE: Robert A. Guth and Nick Wingfield, “Microsoft’s ‘Massive’ Move into Game Ads,” Wall Street Journal, April 26,2006, B1.

DIRECTORY ASSISTANCE ADVERTISING 

Companies are offering free telephone directory assistance—but there’s an advertisement first.

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The audio ads are narrowly targeted, and are 10 to 12 seconds.

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The growth of such free services could represent another change in the telecom industry.

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Dial 1-800-FREE411 or 1-800-411-METRO SOURCE: Rebecca Buckman, “Your Listing, and a Word From Our Sponsor,” Wall Street Journal, April 20,2006, B1.

QUALITATIVE FACTORS IN MEDIA SELECTION

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Attention to the commercial and the program 

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Program liking

Lack of distractions

Other audience behaviors

MEDIA SCHEDULING Continuous Media Schedule

Advertising is run steadily throughout the period.

Flighted Media Schedule

Advertising is run heavily every other month or every two weeks.

Pulsing Media Schedule

Advertising combines continuous scheduling with flighting.

Seasonal Media Schedule

Advertising is run only when the product is likely to be used.

MEDIA SCHEDULING ON THE WEB 



Competition for Web advertising spots is driving up prices.

Some Web advertisers now run campaigns based on time of day. Examples:  McDonald’s: breakfast meals during morning hours  Xerox: copier ads during the workday  Budweiser: beer ads on Friday afternoons 

Scheduling Web ads during prime times is a more efficient use of ad dollars and more targeted.

SOURCE: David Kesmodel, “More Marketers Place Web Ads by Time of Day,” Wall Street Journal, June 23, 2006, B1.

REVIEW LEARNING OUTCOME MEDIA EVALUATION AND SELECTION Type: Newspaper Magazine Radio Television Outdoor Internet Alternative

Scheduling:

Considerations: Mix Cost per contact person? Reach Frequency Audience selectivity audience?

How much of each? How much per How many people? How often? How targeted is

continuous flighted pulsing

seasonal Winter Spring Summer

Fall

SALES PROMOTION

Define and state the objectives of sales promotion

SALES PROMOTION

Sales Promotion

Marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates a purchase.

SALES PROMOTION

Advertising

Reason to buy

Sales Promotion

Incentive to buy

SALES PROMOTION Consumer Consumer Sales Sales Promotion Promotion

Goal

Trade Trade Sales Sales Promotion Promotion

Consumer market

Drive immediate purchase Influence behavior Marketing channel

OBJECTIVES OF SALES PROMOTION Type of Buyer

Loyal Customers

Desired Results

Sales Promotion Examples

•Reinforce behavior •Loyalty marketing •Increase consumption • •Change purchase timing Bonus packs

Competitor’s Customers

•Break loyalty •Persuade to switch

•Sampling •Sweepstakes, contests, premiums

Brand Switchers

•Persuade to buy your brand more often

•Price-lowering promotion •Trade deals

Price Buyers

•Appeal with low prices •Supply added value

•Coupons, price-off packages, refunds •Trade deals

REVIEW LEARNING OUTCOME THE OBJECTIVES OF SALES PROMOTION

TOOLS FOR CONSUMER SALES PROMOTION

Discuss the most common forms of consumer sales promotion

TOOLS FOR CONSUMER SALES PROMOTION Coupons Coupons and and Rebates Rebates Premiums Premiums Loyalty Loyalty Marketing Marketing Programs Programs Contests Contests & & Sweepstakes Sweepstakes Sampling Sampling Point-of-Purchase Point-of-Purchase Promotion Promotion

TOOLS FOR CONSUMER SALES PROMOTION

Coupon Coupon

A A certificate certificate that that entitles entitles consumers consumers to to an an immediate immediate price price reduction. reduction.

Rebate Rebate

A A cash cash refund refund given given for for the the purchase purchase of of aa product product during during aa specific specific period. period.

Premium Premium

An An extra extra item item offered offered to to the the consumer, consumer, usually usually in in exchange exchange for for some some proof proof of of purchase. purchase.

TOOLS FOR CONSUMER SALES PROMOTION

Loyalty Marketing Program

A promotional program designed to build long-term, mutually beneficial relationships between a company and key customers.

Frequent Buyer Program

A loyalty program in which loyal consumers are rewarded for making multiple purchases.

TOOLS FOR CONSUMER SALES PROMOTION

Contests

Promotions that require skill or ability to compete for prizes.

Sweepstakes

Promotions that depend on chance or luck, with free participation.

TOOLS FOR CONSUMER SALES PROMOTION

Sampling Sampling

A A promotional promotional program program that that allows allows the the consumer consumer the the opportunity opportunity to to try try aa product product or or service service for for free. free.

METHODS OF SAMPLING

POINT-OF-PURCHASE PROMOTION

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



Build traffic

Advertise the product

Persuade impulse buying

ONLINE SALES PROMOTION Effective Types of Online Sales Promotion

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Free merchandise 

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Sweepstakes

Free shipping with purchases 

Coupons

REVIEW LEARNING OUTCOME CONSUMER SALES PROMOTION

Coupons and rebates Premiums Loyalty marketing programs Contests Sampling P-O-P Online

TOOLS FOR TRADE SALES PROMOTION

List the most common forms of trade sales promotion

TRADE SALES PROMOTION Trade Trade Allowances Allowances Push Push Money Money Training Training Free Free Merchandise Merchandise Store Store Demonstration Demonstration Conventions Conventions & & Trade Trade Shows Shows

TRADE ALLOWANCE

Trade Allowance

A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers.

PUSH MONEY

Push Money

Money offered to channel intermediaries to encourage them to “push” products--that is, to encourage other members of the channel to sell the products.

BENEFITS OF TRADE PROMOTIONS Help manufacturers gain new distribution Obtain wholesaler and retailer support for consumer sales promotions Build or reduce dealer inventories Improve trade relations

REVIEW LEARNING OUTCOME FORMS OF TRADE SALES PROMOTION

PUBLIC RELATIONS

Discuss the role of public relations in the promotional mix

PUBLIC RELATIONS

Public Relations

The element in the promotional mix that:  evaluates public attitudes  identifies issues of public concern  executes programs to gain public acceptance

FUNCTIONS OF PUBLIC RELATIONS Press Press relations relations Product Product publicity publicity Corporate Corporate communication communication Public Public affairs affairs Lobbying Lobbying Employee Employee and and investor investor relations relations Crisis Crisis management management

PUBLIC RELATIONS TOOLS New New product product publicity publicity Product Product placement placement Consumer Consumer education education Event Event sponsorship sponsorship Issue Issue sponsorship sponsorship Internet Internet Web Web sites sites

EXAMPLE OF CONSUMER EDUCATION 

Corporations are teaching public school students about personal finance.

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People under age 25 are a fastgrowing group for credit card debt increases and bankruptcy.

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Is it appropriate to use educational materials with a corporate identity?

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How should financial literacy be taught?

SOURCE: Diya Gullapalli, “Your Kid’s Teacher: The Bank,” Wall Street Journal, April 8-9, 2006, B1.

MANAGING UNFAVORABLE PUBLICITY

Crisis Management

REVIEW LEARNING OUTCOME THE ROLE OF PUBLIC RELATIONS

PERSONAL SELLING

Describe personal selling

PERSONAL SELLING Personal Selling Advertising & Sales Promotion are more important if... is more important if... Product has a high value. Product has a low value. Product is custom made. Product is standardized. There are few customers.There are many customers. Product is technically complex.

Product is simple to understand.

Customers are concentrated.

Customers are geographically dispersed.

REVIEW LEARNING OUTCOME PERSONAL SELLING

 Detailed explanation or demonstration Personal Selling Advantages

 Variable sales message  Directed to qualified prospects  Controllable adjustable selling costs  More effective than other promotion in obtaining sale and gaining customer satisfaction

RELATIONSHIP SELLING

Discuss the key differences between relationship selling and traditional selling

RELATIONSHIP SELLING

Relationship (Consultative) Selling

A sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships.

TRADITIONAL SELLING AND RELATIONSHIP SELLING Traditional Personal Selling

Relationship Selling

Sell products

Sell advice, assistance, counsel

Focus on closing sales

Focus on customer’s bottom line

Limited sales planning

Sales planning is top priority

Discuss product

Build problem-solving environment

Assess “product-specific” needs “Lone wolf” approach

Conduct discovery in scope of operations Team approach

Pricing/product focus

Profit impact and strategic benefit focus

Short-term sales follow-up

Long-term sales follow-up

REVIEW LEARNING OUTCOME RELATIONSHIP SELLING VS. TRADITIONAL SELLING

Sales Increases Result From Creating Value

Initial Sales

Repeat Sales

Successive Sales

Traditional Sales Relationship Sales

STEPS IN THE SELLING PROCESS

List the steps in the selling process

STEPS IN THE SELLING PROCESS Generate Generate Leads Leads Qualify Qualify Leads Leads Probe Probe Customer Customer Needs Needs Develop Develop Solutions Solutions Handle Handle Objections Objections Close Close the the Sale Sale Follow Follow Up Up

TIME SPENT IN KEY STEPS OF SELLING PROCESS Key Selling Steps

Traditional Selling

Relationship Selling

Generate Leads

High

Low

Qualify Leads

Low

High

Probe Needs

Low

High

Develop Solutions

Low

High

Handle Objections

High

Low

Close the sale

High

Low

Follow-up

Low

High

GENERATING LEADS

Advertising Advertising

Publicity Publicity

Direct Direct Mail/ Mail/ Telemarketin Telemarketin gg

Cold Cold Calling Calling

Internet Internet Web Web Site Site

Referrals Referrals

Networking Networking

Trade Trade Shows/ Shows/ Conventions Conventions

Company Company Records Records

COLD CALLING

Cold Calling

A form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects’ needs or financial status.

QUALIFYING LEADS

Recognized Recognized need need

Buying Buying power power

Receptivity Receptivity and and accessibility accessibility

NEEDS ASSESSMENT

Needs Assessment

A determination of the customer’s specific needs and wants and the range of options a customer has for satisfying them.

THE CONSULTATIVE SALESPERSON Product Product or or service service

Salesperson Salesperson must must know know everything everything about... about...

Customers Customers Competition Competition Industry Industry

DEVELOPING AND PROPOSING SOLUTIONS

Sales Sales Proposal Proposal

Sales Sales Presentation Presentation

POWERFUL PRESENTATIONS Be well prepared Use eye contact Ask open-ended questions Be poised Use hand gestures and voice inflection Focus on the customer needs Incorporate visual elements Know how to operate the A/V equipment Make sure the equipment works PRACTICE, PRACTICE, PRACTICE!

HANDLING OBJECTIONS

 View objections as requests for information  Anticipate specific objections  Investigate the objection with the customer  Be aware of competitors’ products  Stay calm  Use the objection to close the sale

CLOSING THE SALE Look Look for for customer customer signals signals

Keep Keep an an open open mind mind

Negotiate Negotiate

Tailor Tailor to to each each market market

REVIEW LEARNING OUTCOME STEPS IN THE SELLING PROCESS

SALES MANAGEMENT

Describe the functions of sales management

SALES MANAGEMENT RESPONSIBILITIES Define Define sales sales goals goals and and sales sales process process Determine Determine sales sales force force structure structure Recruit Recruit and and train train sales sales force force Compensate Compensate and and motivate motivate sales sales force force Evaluate Evaluate sales sales force force

DEFINING SALES GOALS Clear Clear

Precise Precise

Measurable Measurable

Time Time Specific Specific

Sales Volume Market Share Profit Level

QUOTA

Quota

A statement of the individual salesperson’s sales objectives, usually based on sales volume alone but sometimes including key accounts, new accounts, repeat sales, and specific products.

SALES FORCE STRUCTURE Geographic Geographic region region Product Product line line Marketing Marketing function function Market Market or or industry industry Individual Individual client client or or account account

CHARACTER OF TOP SALES PERFORMERS  Strong,  Can  Sense

healthy self esteem

bounce back from rejection

of urgency and competitiveness  Persuasive  Self-confident  Sociable  Willing

 Understand  Creative

to take risks complex concepts

in developing solutions

 Possess

empathy

TRAINING THE SALES FORCE Company Company policies policies and and practice practice Selling Selling techniques techniques Training Training includes... includes...

Product Product knowledge knowledge Industry Industry and and customer customer characteristics characteristics Nonselling Nonselling duties duties

COMPENSATING THE SALES FORCE

Commission Commission

Combination Combination Plans Plans

Salary Salary

COMPENSATING THE SALES FORCE

Straight Commission

The salesperson is paid some percentage when a sale is made.

Straight Salary

The salesperson receives a salary regardless of sales productivity.

MOTIVATING THE SALES FORCE

Rewards and incentives include:  Ceremonies  Plaques  Vacations  Merchandise  Pay raises  Cash bonuses  Stock options  Tuition assistance  Product discounts

KEY PERSONALITY TRAITS OF SALES LEADERS Effective Sales Leaders are…

Are Are confident confident Possess Possess ego ego drive drive Possess Possess ego ego strength strength Take Take risks risks Are Are innovative innovative Have Have aa sense sense of of urgency urgency Are Are empathetic empathetic

EVALUATING THE SALES FORCE Sales Sales volume volume Contribution Contribution to to profit profit Calls Calls per per order order Sales Sales or or profits profits per per call call Call Call percentage percentage achieving achieving goals goals

WOMEN IN CAR SALES 

For its Florida and Texas dealerships, Asbury Automotive Group is actively recruiting saleswomen– at shopping malls.

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11% of the automotive sales force is female. In contrast, 50% of retail-industry employees are women.

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Women influence 81% of new auto purchases, and women may even be better at selling cars than men. SOURCE: Jennifer Saranow, “Car Dealers Recruit Saleswomen at the Mall,” Wall Street Journal, April 12, 2006, B1.

THE IMPACT OF TECHNOLOGY ON PERSONAL SELLING Cell Cell phones phones Laptops Laptops Pagers Pagers E-Mail E-Mail Electronic Electronic organizers organizers Internet Internet

REVIEW LEARNING OUTCOME FUNCTIONS OF SALES MANAGEMENT

DIRECT MARKETING

Direct marketing (direct-response marketing)

DIRECT MARKETING

Direct Marketing

Techniques used to get consumers to make a purchase from their home, office, or another nonretail setting.

TYPES OF DIRECT MARKETING Direct Direct Mail Mail

Catalogs Catalogs and and Mail Mail Order Order

Telemarketing Telemarketing

Q&A SESSION THANK YOU…