Chapter 8: Marketing Communications and Pricing 1 Copyright 2005 Prentice Hall Inc. A Pearson...

Chapter 8: Marketing Communications and PricingChapter 8: Marketing Communications and Pricing 11Copyright 2005 Prentice Hall Inc. A Pearson Education CompanyCopyright 2005 Prentice Hall Inc. A Pearson Education Company

Integrated Marketing Communications and

Pricing Strategies

Integrated Marketing Communications and

Pricing Strategies

It Pays to Advertise!


Developing a Marketing Developing a Marketing Communications PlanCommunications Plan

Step 1: Create specific, Step 1: Create specific, measurable objectives.measurable objectives.

Step 2: Identify and analyze Step 2: Identify and analyze the target audience.the target audience.

Step 3: Design an Step 3: Design an advertising message and advertising message and choose the media for choose the media for transmitting it. transmitting it.


Build Ads Around a UniqueBuild Ads Around a UniqueSelling Proposition (USP)Selling Proposition (USP)

USPUSP - A key customer benefit of a - A key customer benefit of a product or service that answers the product or service that answers the critical question that critical question that everyevery customer customer asks: “asks: “What's in it for meWhat's in it for me?”?”

Identify your product or service's USP Identify your product or service's USP by describing the primary benefit it by describing the primary benefit it offers customers and then list other offers customers and then list other secondary benefits it provides.secondary benefits it provides.


Build Ads Around a UniqueBuild Ads Around a UniqueSelling Proposition (USP)Selling Proposition (USP)

(continued)(continued)

Don’t overlook the intangible or Don’t overlook the intangible or psychological benefits your product psychological benefits your product or service offers. or service offers.

Briefly list a few facts that support Briefly list a few facts that support this USP.this USP.

Then, focus your ads to stress these Then, focus your ads to stress these top benefits and the facts supporting top benefits and the facts supporting them!them!


A Six-Sentence Advertising A Six-Sentence Advertising StrategyStrategy

What is the purpose of this ad?What is the purpose of this ad? What USP can you offer customers?What USP can you offer customers? What other key benefits support your USP?What other key benefits support your USP? At whom are you aiming the ad?At whom are you aiming the ad? What response do you want from your target What response do you want from your target

audience?audience? What image do you want to convey in your What image do you want to convey in your

ads?ads?

Five Fundamentals of a Successful Advertisement.Five Fundamentals of a Successful Advertisement.

It should attract attention.It should emphasize a keybenefit of the product orservice to the customer.

It should communicate the company’s UniqueSelling Proposition (USP).

It should prove the USPand benefits to the customerwith facts, statistics, or testimonials.

It should motivate customersto take action immediately.

Source: Adapted from Jerry Fisher, “Fine Print,” Entrepreneur, November 1994, pp. 145-147.


Can Your Ad Pass These 7 Tests?Can Your Ad Pass These 7 Tests?

Scan testScan testComprehension testComprehension testDifferentiation testDifferentiation testPuffery testPuffery testBelievability testBelievability test Immediate clarity testImmediate clarity testUSP test USP test Click Here

For Details


Promotion Includes…Promotion Includes…

PublicityPublicity - any commercial news covered by the - any commercial news covered by the media that boosts sales but for which the small media that boosts sales but for which the small business does not pay.business does not pay.

Personal sellingPersonal selling - the personal contact between - the personal contact between sales personnel and potential customers sales personnel and potential customers resulting from sales efforts.resulting from sales efforts.

AdvertisingAdvertising - any sales presentation that is - any sales presentation that is nonpersonal in nature and is paid for by an nonpersonal in nature and is paid for by an identified sponsor.identified sponsor.


Tips for Stimulating PublicityTips for Stimulating Publicity

Write an article of interest Write an article of interest to customers.to customers.

Sponsor an off-beat event.Sponsor an off-beat event. Involve celebrities “on the Involve celebrities “on the

cheap.” cheap.” Offer to be interviewed on Offer to be interviewed on

TV and radio stations.TV and radio stations. Publish a newsletter.Publish a newsletter. Speak to local Speak to local

organizations.organizations.

Sponsor a seminar.Sponsor a seminar. Write news releases and fax Write news releases and fax

or e-mail them to the or e-mail them to the media.media.

Serve on community and Serve on community and industry boards and industry boards and committees.committees.

Sponsor a community Sponsor a community project or support a project or support a nonprofit organization.nonprofit organization.

Promote a cause.Promote a cause.


Sponsorships and Special EventsSponsorships and Special Events

Sponsoring special events generates Sponsoring special events generates publicity, attracts interest, and provides a publicity, attracts interest, and provides a lasting impression of a company in lasting impression of a company in customers’ minds.customers’ minds.

North American companies spend $7 North American companies spend $7 billion a year on sponsorships.billion a year on sponsorships.

Small companies can create their own Small companies can create their own special events. special events.


Tips for Sponsoring an EventTips for Sponsoring an Event

Don’t count on sponsorships for your Don’t count on sponsorships for your entire advertising campaign.entire advertising campaign.

Look for or create an event that is Look for or create an event that is appropriate for your business.appropriate for your business.

Research the event and the organization Research the event and the organization hosting it hosting it beforebefore agreeing to become a agreeing to become a sponsor. sponsor.


Tips for Sponsoring an EventTips for Sponsoring an Event(continued)(continued)

Try to become the dominant (or ideally, Try to become the dominant (or ideally, the only) sponsor of the event.the only) sponsor of the event.

Clarify the costs and the level of Clarify the costs and the level of participation required for sponsorship up participation required for sponsorship up front.front.

Get involved; take an active role in the Get involved; take an active role in the event. event.


Top Salespeople…Top Salespeople…

Are enthusiastic and alert to new Are enthusiastic and alert to new opportunities.opportunities.

Are experts in the products and services Are experts in the products and services they sell.they sell.

Concentrate on select accounts.Concentrate on select accounts.Plan thoroughly.Plan thoroughly.Use a direct approach.Use a direct approach.


Top Salespeople…Top Salespeople…

Work from the customer’s perspective.Work from the customer’s perspective.Use past success stories.Use past success stories.Leave sales material with clients.Leave sales material with clients.See themselves as problem solvers, not See themselves as problem solvers, not

just vendors.just vendors.Measure their success not just by sales Measure their success not just by sales

volume but by customer satisfaction. volume but by customer satisfaction.



Successful Personal SellingSuccessful Personal SellingRequires a Selling System Requires a Selling System

Create trust and respectCreate trust and respect - Establish rapport - Establish rapport with prospect.with prospect.

Interview the prospectInterview the prospect - Let the prospect - Let the prospect talk to determine the key criteria that talk to determine the key criteria that influence the buying decision.influence the buying decision.

Demonstrate, explain, and showDemonstrate, explain, and show – Make – Make clear the benefits of your product or service.clear the benefits of your product or service.


Successful Personal SellingSuccessful Personal SellingRequires a Selling System Requires a Selling System

ValidateValidate - Prove the claims about your - Prove the claims about your product or service.product or service.

Overcome objectionsOvercome objections- Listen for objections - Listen for objections and try to overcome them.and try to overcome them.

CloseClose - Stop talking and ask for the order. - Stop talking and ask for the order.



Selecting Advertising Media:Selecting Advertising Media:Key QuestionsKey Questions

How large is my firm's trading area?How large is my firm's trading area? Who are my customers and what are Who are my customers and what are

their characteristics?their characteristics? Which media are my target customers Which media are my target customers

most likely to watch, listen to, or read?most likely to watch, listen to, or read? What budget limitations do I face?What budget limitations do I face?


Selecting Advertising Media:Selecting Advertising Media:Key QuestionsKey Questions

Which media do my competitors use?Which media do my competitors use? How important are repetition and How important are repetition and

continuity of my advertising message?continuity of my advertising message? How does each medium compare with How does each medium compare with

others in its audience, its reach, and its others in its audience, its reach, and its frequency?frequency?

What does the advertising medium cost?What does the advertising medium cost? Absolute cost Absolute cost Relative costRelative cost



Advertising Media OptionsAdvertising Media Options

Outdoor adsOutdoor adsTransit advertisingTransit advertisingDirectoriesDirectoriesTrade showsTrade showsSpecialty advertisingSpecialty advertisingPoint-of-purchase Point-of-purchase

adsads

Word-of-MouthWord-of-Mouth NewspapersNewspapers RadioRadio TelevisionTelevision MagazinesMagazines Direct mailDirect mail World Wide WebWorld Wide Web

23.5%

19.3%19.1%

7.7%5.9% 4.8%

1.9% 2.2% 2.5%

13.0%

0%

5%

10%

15%

20%

25%

Pe

rce

nt

Medium

Advertising Expenditures by Medium


NewspapersNewspapers

AdvantagesAdvantages Selected geographic coverageSelected geographic coverage FlexibilityFlexibility TimelinessTimeliness Communication potentialCommunication potential Low costLow cost Prompt responsesPrompt responses


NewspapersNewspapers(continued)(continued)

DisadvantagesDisadvantages Wasted readershipWasted readership Reproduction limitationsReproduction limitations Lack of prominenceLack of prominence Declining readershipDeclining readership Short ad lifeShort ad life


RadioRadio

AdvantagesAdvantages Universal infiltrationUniversal infiltration Market segmentationMarket segmentation Flexibility and timelinessFlexibility and timeliness FriendlinessFriendliness

DisadvantagesDisadvantages Poor listeningPoor listening Need for repetitionNeed for repetition Limited messageLimited message


Snappy Radio Copy Should....Snappy Radio Copy Should....

Stress benefits to the Stress benefits to the listener.listener.

Use attention-getters.Use attention-getters. Zero in on a particular Zero in on a particular

audience.audience. Be simple and to the Be simple and to the

point.point. Sell early and often.Sell early and often. Be written for the ear.Be written for the ear.

Be rehearsed before Be rehearsed before presentation.presentation.

Use positive action Use positive action words.words.

Put the listener in the Put the listener in the picture.picture.

Mention the advertiser Mention the advertiser often.often.

Focus on getting a Focus on getting a response.response.


TelevisionTelevision

AdvantagesAdvantages Broad coverageBroad coverage Visual advantageVisual advantage FlexibilityFlexibility Design and production assistanceDesign and production assistance


TelevisionTelevision(continued)(continued)

DisadvantagesDisadvantages Brief exposureBrief exposure ClutterClutter ZappingZapping Fragmented audienceFragmented audience CostsCosts


Creative Television AdsCreative Television Ads

Keep it simple.Keep it simple.Have one basic idea.Have one basic idea.Make your point Make your point

clear.clear.Make it unique.Make it unique.Get viewers’ Get viewers’

attention.attention. Involve the viewer.Involve the viewer.

Use emotion.Use emotion.Consider Consider

production values.production values.Prove your Prove your

product’s or product’s or service’s benefit.service’s benefit.

Identify your Identify your company well and company well and often.often.


MagazinesMagazines

AdvantagesAdvantages Long life spansLong life spans Multiple readershipMultiple readership Target marketingTarget marketing Ad qualityAd quality

DisadvantagesDisadvantages CostCost Long closing timesLong closing times Lack of prominenceLack of prominence


Direct MailDirect Mail

AdvantagesAdvantages SelectivitySelectivity FlexibilityFlexibility Reader attentionReader attention Rapid feedbackRapid feedback Measurable results and Measurable results and

testable strategiestestable strategies EffectivenessEffectiveness


Direct MailDirect Mail(continued)(continued)

DisadvantagesDisadvantages Inaccurate mailing listsInaccurate mailing lists ClutterClutter High relative costsHigh relative costs High throwaway rateHigh throwaway rate


Creating Direct Mail Ads That Creating Direct Mail Ads That Really WorkReally Work

Promise benefits in the headline.Promise benefits in the headline. Use short “action” words.Use short “action” words. Use lots of white space.Use lots of white space. Use eye-catching words.Use eye-catching words. Forget grammatical rules.Forget grammatical rules. Repeat the offer at least three times.Repeat the offer at least three times. Offer proof of claims and endorsements.Offer proof of claims and endorsements. Ask for the order.Ask for the order.


Creating Direct Mail Ads That Creating Direct Mail Ads That Really WorkReally Work

Ask the reader questions in the copy.Ask the reader questions in the copy. Use high-quality paper and envelopes.Use high-quality paper and envelopes. People usually open envelopes that resemble People usually open envelopes that resemble

bills.bills. Address envelopes to a particular person.Address envelopes to a particular person. Use stamps if possible.Use stamps if possible. Use a “P.S.” because recipients almost always Use a “P.S.” because recipients almost always

read them.read them. Make the order form easy to fill out. Make the order form easy to fill out.



Advertising on the WebAdvertising on the Web

Banner adsBanner ads Pop-up adsPop-up ads CookiesCookies Full-page adsFull-page ads Push technology adsPush technology ads E-mail adsE-mail ads

Permission e-mailPermission e-mail SpamSpam


Outdoor AdvertisingOutdoor Advertising

AdvantagesAdvantages High exposureHigh exposure Broad reachBroad reach FlexibilityFlexibility Cost efficiencyCost efficiency

DisadvantagesDisadvantages Brief exposureBrief exposure Limited ad recallLimited ad recall Legal restrictionsLegal restrictions Lack of prominenceLack of prominence


Transit AdvertisingTransit Advertising

AdvantagesAdvantages Wide coverageWide coverage Repeat exposureRepeat exposure Low costLow cost FlexibilityFlexibility

DisadvantagesDisadvantages GeneralityGenerality Limited appealLimited appeal Brief messageBrief message


DirectoriesDirectories

AdvantagesAdvantages Prime prospectsPrime prospects Long lifeLong life

DisadvantagesDisadvantages Lack of flexibilityLack of flexibility Ad clutterAd clutter ObsolescenceObsolescence


Trade ShowsTrade Shows

AdvantagesAdvantages Natural marketNatural market Pre-selected audiencePre-selected audience New customer marketNew customer market Cost advantageCost advantage

DisadvantagesDisadvantages Increasing costsIncreasing costs Wasted effortWasted effort


Specialty AdvertisingSpecialty Advertising

AdvantagesAdvantages Reaching selected audiencesReaching selected audiences Personalized naturePersonalized nature VersatilityVersatility

DisadvantagesDisadvantages Potential for wastePotential for waste CostsCosts


Preparing An Advertising BudgetPreparing An Advertising Budget

What is affordableWhat is affordableMatching competitor's advertising Matching competitor's advertising

expendituresexpendituresPercentage of Sales Percentage of Sales

Past SalesPast Sales Forecasted SalesForecasted Sales

Objective-and-TaskObjective-and-Task


How To Advertise “Big”How To Advertise “Big”On A Small BudgetOn A Small Budget

Take advantage of cooperative Take advantage of cooperative advertising.advertising.

Consider shared advertising.Consider shared advertising.Repeat ads that have been successful.Repeat ads that have been successful.Use identical ads in different media.Use identical ads in different media.


How To Advertise “Big”How To Advertise “Big”On A Small BudgetOn A Small Budget


Hire independent copywriters and Hire independent copywriters and artists.artists.

Concentrate advertising when customers Concentrate advertising when customers are most likely to buy.are most likely to buy.

Maximize publicity with techniques such Maximize publicity with techniques such as cause marketing.as cause marketing.

What determines price?What determines price?

Price CeilingPrice Ceiling ("What will the market bear?") ("What will the market bear?")

Price FloorPrice Floor ("What are the company's costs?") ("What are the company's costs?")

AcceptableAcceptable PricePrice RangeRange

??

??

??

??

??

????

??

??

??

??

Final PriceFinal Price (What is the (What is thecompany's desired "image?")company's desired "image?")

Final PriceFinal Price (What is the (What is thecompany's desired "image?")company's desired "image?")

??


Introducing A New ProductIntroducing A New Product

3 Basic Strategies:3 Basic Strategies: PenetrationPenetration SkimmingSkimming Sliding-down-the-demand-curveSliding-down-the-demand-curve

3 Goals:3 Goals: Getting the product acceptedGetting the product accepted Maintaining market share as competition Maintaining market share as competition

growsgrows Earning a profitEarning a profit


Pricing TechniquesPricing Techniques

Odd pricingOdd pricingPrice liningPrice liningLeader pricingLeader pricingGeographical pricingGeographical pricingOpportunistic pricingOpportunistic pricingDiscountsDiscountsSuggested retail pricesSuggested retail prices


Pricing for Retailers: Pricing for Retailers: MarkupMarkup

Dollar Markup = Retail Price - Cost of MerchandiseDollar Markup = Retail Price - Cost of Merchandise

Percentage (of Retail Price) Markup = Percentage (of Retail Price) Markup = Dollar MarkupDollar MarkupRetail PriceRetail Price

Percentage (of Cost) Markup = Percentage (of Cost) Markup = Dollar MarkupDollar MarkupCost of UnitCost of Unit

ExampleExample::

Dollar Markup = $25 - $15 = $10Dollar Markup = $25 - $15 = $10

Percentage (of Retail Price) Markup = Percentage (of Retail Price) Markup =

$10$10

$25$25= 40%= 40%

Percentage (of Cost) Markup = Percentage (of Cost) Markup = $10$10

$15$15= 67%= 67%


Pricing for Manufacturers: Pricing for Manufacturers: Breakeven Selling PriceBreakeven Selling Price

Breakeven Breakeven SellingSellingPrice Price

QuantityQuantity

== ProfitProfitVariable Variable

cost per cost per unitunit

producedproduced

Total Total fixed fixed costscosts++

{{{{ xx

}}}}++

Quantity producedQuantity produced


Pricing for Manufacturers: Pricing for Manufacturers: Breakeven Selling PriceBreakeven Selling Price

BreakevBreakeven en

SellingSelling

Price Price

QuantiQuantityty

ExamplExample:e:

= ProfProfitit

Variable Variable cost per cost per unitunit

producproduceded

Total Total fixed fixed costscosts++

{{ xx

}} ++

Quantity Quantity producedproduced

BreakevBreakeven en

SellingSelling

Price Price

= $$00

6.98/6.98/unitunit

50,000 50,000 unitunit

$110,00$110,0000

+ { xx }+

50,000 50,000 unitsunits

= $9.18 per = $9.18 per unitunit


Pricing for Service Firms: Pricing for Service Firms: Price per HourPrice per Hour

Price per Hour = Total cost per x 1Price per Hour = Total cost per x 1 productive hour (1 - net profit target productive hour (1 - net profit target

asas a % of sales)a % of sales)

Example: Ned’s TV Repair ShopExample: Ned’s TV Repair Shop

Price per Hour = $13.44 per x 1 Price per Hour = $13.44 per x 1 hour (1 -.18)hour (1 -.18)

= $16.38 per hour= $16.38 per hour


Consumer CreditConsumer Credit

Credit cardsCredit cardsNationalNational PrivatePrivate

Installment creditInstallment creditTrade creditTrade credit

Chapter 8: Marketing Communications and Pricing 1 Copyright 2005 Prentice Hall Inc. A Pearson...

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Transcript of Chapter 8: Marketing Communications and Pricing 1 Copyright 2005 Prentice Hall Inc. A Pearson...