Marketing: Real People, Real Choices 3rd edition 14-1©2003 Prentice Hall, Inc

Chapter 14

Conversing with the Customer: Promotional

Strategy, Interactive Marketing, and

Database Marketing

Marketing: Real People, Real Choices 3rd edition 14-2©2003 Prentice Hall, Inc

Chapter Objectives_1

Understand the communication model

List and describe the elements of the promotion mix

Explain the stages in developing the promotion plan

Explain the current trend toward interactive promotion strategies

Marketing: Real People, Real Choices 3rd edition 14-3©2003 Prentice Hall, Inc

Chapter Objectives_2

Explain why database marketing is increasingly popular and how databases are developed and managed

Explain how firms implement integrated marketing communications and why some marketers resist it

Marketing: Real People, Real Choices 3rd edition 14-4©2003 Prentice Hall, Inc

Role of Promotion

Promotion is communication by marketers that informs, persuades, reminds, and builds relationships with potential buyers of a product to influence an opinion or elicit a response.

IMC is a plan for optimal use of the elements of promotion: advertising, personal selling, sales promotion, and public relations

Marketing: Real People, Real Choices 3rd edition 14-5©2003 Prentice Hall, Inc

Promotion Mix

Advertising

Sales Promotions

Public Relations

Personal Selling

Marketing: Real People, Real Choices 3rd edition 14-6©2003 Prentice Hall, Inc

Advertising

Non-personal communication from an identified sponsor using the mass media– can convey rich and dynamic images– can establish and reinforce brand identity– can communicate factual information

– can remind customer to buy

Marketing: Real People, Real Choices 3rd edition 14-7©2003 Prentice Hall, Inc

Sales Promotion

Programs that build interest or encourage purchase of a product through the use of an incentive in a specified time period

– coupons– contests– rebates– premiums

Marketing: Real People, Real Choices 3rd edition 14-8©2003 Prentice Hall, Inc

Publicity and Public Relations

Portray an organization and its products positively by influencing the perceptions of various publics

– writing press releases– holding special events– conducting and publishing consumer

surveys– putting a positive spin on negative news

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Developing the Promotion Plan

Framework for developing, implementing, and controlling the firm’s promotional activities

Marketing: Real People, Real Choices 3rd edition 14-10©2003 Prentice Hall, Inc

Step 1: Establish Promotion Objectives

Objectives will change depending on where consumers are on the path to loyalty

Some objectives might be

– create awareness– inform the market– create desire– encourage trial– build loyalty

Marketing: Real People, Real Choices 3rd edition 14-11©2003 Prentice Hall, Inc

Step 2: Identify Influence on the Promotion Mix

Mix must be tailored for each situation

• Push means that the company seeks to move its products through the channel by convincing channel members to offer them and entice their customers to select these items

• Pull means that the company relies on consumers to learn about and express desire for its products

Marketing: Real People, Real Choices 3rd edition 14-12©2003 Prentice Hall, Inc

Step 3: Determine and Allocate the Total Promotion Budget

Top-down budgeting techniques

– percentage-of-sales method

– competitive parity

Bottom-up budgeting technique

– objective-task method

Marketing: Real People, Real Choices 3rd edition 14-13©2003 Prentice Hall, Inc

Step 4: Allocate Budget to Specific Promotion Mix

Organizational factors

Market potential

Market size

Marketing: Real People, Real Choices 3rd edition 14-14©2003 Prentice Hall, Inc

Step 5: Designing the Promotion Mix

Which elements of promotion will be used?

What message is to be communicated?

– Type of appeal?– Structure of appeal?

What communication channels should be employed?

What role will advertising, sales promotion, public relations, and selling play?

Marketing: Real People, Real Choices 3rd edition 14-15©2003 Prentice Hall, Inc

The AIDA Model

Attention

Interest

Desire

Action

Marketing: Real People, Real Choices 3rd edition 14-16©2003 Prentice Hall, Inc

Step 5: Evaluate the Effectiveness of the Promotion

Mix

Is the plan working?– Measure response to sales promotions– Measure brand awareness, recall, and image

before and after ad campaign– Analyze and compare sales performances

by territory and sales force– Clip articles appearing in media

Marketing: Real People, Real Choices 3rd edition 14-17©2003 Prentice Hall, Inc

Interactive Marketing

Attention Economy

– The amount of information seems infinite; our ability to get it is limited by the time we can spend looking

– Interactive media are in the business of buying and selling people’s attention

Customized marketing communications yield a measurable response in the form of a purchase or request for more information

Marketing: Real People, Real Choices 3rd edition 14-18©2003 Prentice Hall, Inc

Levels of Interactive Response

First-order response: product offer directly yields a transaction

Second-order response: product offer results in some form of customer feedback but it isn’t a transaction

– request for more information– request NOT to receive more

information

Marketing: Real People, Real Choices 3rd edition 14-19©2003 Prentice Hall, Inc

Database Marketing

Critical to interactive marketers as they seek to track responses to messages and develop a dialogue with customers

Allows the organization to learn customer preferences, fine-tune and test offerings, build relationships

Marketing: Real People, Real Choices 3rd edition 14-20©2003 Prentice Hall, Inc

Database Marketing

Is interactive

Builds relationships

Locates new customers

Stimulates cross-selling

Is measurable

Is trackable

Marketing: Real People, Real Choices 3rd edition 14-21©2003 Prentice Hall, Inc

Putting It All Together

Integrated Marketing Communications (IMC) is “a strategic business process used to plan, develop, execute, and evaluate coordinated, measurable, persuasive brand communication programs over time with consumers, customers, prospects, and other targeted, relevant external and internal audiences.”

Marketing: Real People, Real Choices 3rd edition 14-22©2003 Prentice Hall, Inc

Characteristics of IMC Approach

Focus on customer need for communications

Reliance on customer database to focus messages

Use of consistent messages via diverse communications vehicles

Careful planning of delivery to generate a steady stream of consistent information

Use of several elements of the promotional mix

Marketing: Real People, Real Choices 3rd edition 14-23©2003 Prentice Hall, Inc

The IMC Planning Model

Start with a Customer Database

Develop Promotional Strategies

Implement Specific Promotional Tactics

Evaluate IMC Communications

– First-order responses– Second-order responses– Attitudes toward brand and firm