4550: Promotion Strategy II Professor Campbell 2/24/05.
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Transcript of 4550: Promotion Strategy II Professor Campbell 2/24/05.
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4550: Promotion Strategy II4550: Promotion Strategy II
Professor Campbell2/24/05
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Plan for the DayPlan for the Day
• Consumer promotions– Online promotions
– Testing
• Trade promotions
• Putting promotions in perspective
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Online PromotionsOnline Promotions
• Advantages+ Real-time tracking
+ Message execution+ Product movement+ Easily/fast modification
+ Data capture
+ Follow-up opportunities
+ Costs+ Reach & Frequency+ Redemption
+ Friendly target?
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Online Promotions, continued...Online Promotions, continued...
• Disadvantages:– Response rate prediction
– Lack of “real” consumer interest
– Often does not build equity
• Usage
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Questions for Online PromotionsQuestions for Online Promotions
• Does this NEED to be online?– (to meet objective)
• Is this something that will work better online than in traditional media?
• What does this say about the brand?
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Testing PromotionsTesting Promotions
• Is the promotion offer being processed by target consumers as intended to meet communication goals?
• How does the promotion affect brand equity?– Consumers’ attributions for the
promotion need to be understood
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Trade PromotionsTrade Promotions
• Promotions (ie, short-term incentive) targeted to some member of the channel of distribution– Should be based on well-defined,
specific objectives
– Should have measurable goals
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Trade Promotions: ObjectivesTrade Promotions: Objectives
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Trade PromotionsTrade Promotions
• Point-of purchase displays
• Trade deals/ Buying allowances– Price-offs/ Off-invoice– Free goods– Slotting allowances
• Dealer loaders
• Comarketing– Co-op Ads– Account Specific Promotions
• Market Development Funds
• Dealer contests & incentives– Push $$/Spiffs
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Price-offsPrice-offs
• Advantages+Quick implementation+Evoke strong response and fast
response
• Disadvantages– Cost– Short-term impact– Does not help brand equity and can
hurt it
• Usage» Short-term competitive response
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Tradeoffs among PromotionsTradeoffs among Promotions
Manufacturer Factors
Pass ThroughUnplanned CostsAbility to Forecast CostsLead TimeSource of OfferImmediacy of ImpactAdded Cost to RetailerEffect on Brand Equity
Consumer Factors
Timing of RewardConsumer EffortImpulse of Planned?# of Units can Purchase% Regular Users
Price Reductions
UnsureIncomplete PassLowShortRetailerHighShelf TalkerNegative
ImmediateLowImpulseYesModerate
Bonus Packs
YesResidual StockModerateLongManufacturerModerateHandlingDepends
ImmediateLowImpulseYesModerate
Coupons
YesMisredemptionHighModerateManufacturerLowCheckout TimeDepends
DelayedModeratePlannedNoHigh
Trial Sizes
YesResidual StockModerateLongManufacturerModerateIn-Store HandlingDepends-Neutral
ImmediateLowImpulseYesLow
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Generalizations about Promotion TypesGeneralizations about Promotion Types
AdvertisingAdvertising
Franchise BuildingFranchise Building
Brand Benefit EmphasisBrand Benefit Emphasis
High Marketer ControlHigh Marketer Control
Pull StrategyPull Strategy
Longer-Term ImpactLonger-Term Impact
Investment FinancingInvestment Financing
Long Time HorizonLong Time Horizon
Image orientedImage oriented
Consumer Consumer PromotionPromotion Trade Trade
PromotionPromotionNon-franchise BuildingNon-franchise Building
Price EmphasisPrice Emphasis
Low Marketer ControlLow Marketer Control
Push StrategyPush Strategy
Short-Term ImpactShort-Term Impact
Pay-as -You-Go FinancingPay-as -You-Go Financing
Shorter Time HorizonShorter Time Horizon
Action orientedAction oriented
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PromotionsPromotions
• Usage of promotions grew dramatically during the ‘80’s and early ‘90’s– 60% of consumer goods firms were spending
more on promotions than ads
– 80% of consumers made use of promotions
• Trend then began reversing– 1991 - average of 47% of budget went to
promotions
– 1995 - average of 44% of budget went to promotions
• Now appears to be increasing again– Retailer power & expectations
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LimitationsLimitations
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Other “Promotions”Other “Promotions”
• Because of limitations, promotion expenditures are increasingly going to non-sales promotions, e.g., event sponsorship– Global trend
– Consistent with “micro-marketing,” “relationship marketing”
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Setting the Marketing Communications MixSetting the Marketing Communications Mix• Decide on target market and
marketing communications objectives – What effect do you want to have on
the consumer?
• Then decide which communications tools appear to be the best for achieving the desired effects
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What can we do to Generate Trial?What can we do to Generate Trial?
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What can we do to Generate Usage? What can we do to Generate Usage?
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Think about Brand BuildingThink about Brand Building
• Non-Brand-Building Promos– Accelerate purchase process and
generate an immediate increase in sales
• Brand-Building Promo– Communicate brand attributes and
contribute to the development and reinforcement of brand identity
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Base the marketing Base the marketing communications mix communications mix on consideration of on consideration of the communications the communications objectives and how objectives and how best to achieve thembest to achieve them
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In Conclusion...In Conclusion...
• Some promotions are likely to be necessary– Consumer: may be the best route to
objectives– Trade: may be best route to objective
but also may not have much latitude
• Interest should be in incremental sales (versus short terms spikes in the sales curve)
• Promotions (like everything else!) should be considered in terms of likely effects on brand equity
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Conclusion, continued…Conclusion, continued…
• Advertising and promotion work together– Prior attitude-building advertising
creates higher perceived value from a brand’s promotion
– Prior attitude-building advertising creates resistance in the consumer to other brand’s promotional activities
• Synergies among marketing communications activities can make or break the overall plan.