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Promotion Mix Vs Consumer Demand by Tolulope Ofi

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Chapter 12. promotion mix
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Promotion Mix Vs Consumer Demand by Tolulope Ofi

  1. 1. Promotion Mix Vs Consumer Demand BY TOLU OFI APRIL 20TH, 2016
  2. 2. Brief Overview  Why embark on this study  Promotion tools  Strategies deployed in each tool  Merits and demerits of each promotion tool  Measuring each tools impact on consumer demand  Conclusion * Analysis
  3. 3. Why embark on this study  Promotion mix plays an important role in stimulating the behavior of consumers to make a purchase  The major challenge faced by organizations today is selecting the combination of tools appropriate for stimulating consumer demand  Combination of tools relies mainly on the message  For example, Nike indulges in marketing communication mix. “The Marketing Communications Mix is the specific mix of advertising, personal selling, sales promotion, public relations, and direct marketing a company uses to pursue its advertising and marketing objectives”
  4. 4.  Nike uses this strategy to; Communicate with target market worldwide Creates a balance between attracting new customers and keeping existing ones.  Risks associated with using one or more promotional tools Inability to comprehend message  “By taking the time to develop and implement an appropriate promotional mix, you will stimulate your target audience to buy your products or services – and manage this within a budget you can afford” (CIM, 2009).
  5. 5. This study is been embarked upon to understand how various promotional tool affect or have an impact on consumer demand as well as what motivates consumers in making buying decisions
  6. 6.  Promotional mix is the combination of various tools designed to help a firm reach its goals  Consumer demand is the measure of consumers’ desire for a product or service based on its availability and the extent to which they are willing to go to make a purchase
  7. 7. Public Relation Definitions  It is a tool used to create or enhance the reputation of a firm by establishing and maintaining mutual relationship or positioning between the firm and its customers/public.  According to Carl Botan 1992, It is using communication to adapt relationships between organizations and their publics.  According to Public Relations Institute of Australia, public relation is the management function which evaluates public attitudes, identifies the policies and procedures of an individual or an organization with the public interest, and plans and executes a programme of action to earn the public understanding and acceptance (ABS, 2015).
  8. 8. Importance of Public Relation  Boost or foster company image One of the leading factors to an organizations success revolves mainly around how the public views that organization. Example: Nike – Charitable events and marketing communication mix  Build understanding between a company and public Organizations seek the cooperation of public on a long term basis “The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions” (Boundless, 2015).
  9. 9.  Useful in dealing with bad situations Damaged company image Example: Chipotle’s food contamination problem Effective public relations tell a company's story in a way that is accurate, honest, and easy to understand, helping to establish a reputation for credibility (Johnston, 2015).  Encourages feedback from the public Creates atmosphere of trust “PR professionals recognize that to manage relationships, they must understand and respect public concerns and viewpoints” (Johnston, 2014)
  10. 10.  Helps in stimulating demand  Building product awareness Through special events and public events
  11. 11. Strategies used in public relation  Public Events - The need for professionals Raise the company’s profile or lend its name to an event that represents its philosophy - Hospital organizing a health outreach day Example: McDonald in 2012 https://youtu.be/FCe1yM_jYik
  12. 12. Word of Mouth Concept used by organizations in requesting that each satisfied customers help spread a positive message about its products or services  The Objective – to create advertisement that spark conversation, which would lead to persuasion of the prospect and eventually to a purchase  Enhances credibility and prestige  Use of technology to share experience via social media Example: Starbucks  Marketing strategy not commonly seen in business today  Huge emphasis on customer satisfaction  Improvement in product quality “Starbucks has invested a lot of resources into growing their social media presence and encourages customer comments and suggestions with its digital properties and continues to favor word-of-mouth communication and technology over traditional advertising” (Dougherty, 2015).
  13. 13. Advantages of public relation  Exposure to detailed information -Product, services & company -Educated decision  Establishes credibility -Positive experience shared is more likely to induce purchase  Low cost - less cost associated with conducting a campaign -Smaller business looking to save money
  14. 14. Disadvantages  Damage brand image -Unsatisfied customers  Locating the most appropriate media -Difficulty in selecting the most effective medium to reach target audience  Lack of guarantee for media space and time -unexpected events (Critical weather conditions/crime news)
  15. 15. Measuring the effectiveness  Media coverage * count on the amount of news releases, feature stories, photo’s etc. produced in a given period * evaluation provides information on productivity and level of output.  Changes in attitudes, opinions, and behaviors * track social networking sites (comments), blogs, news sites etc. to gain insight on conversation  Repeat purchase * Level of demand
  16. 16. Advertising Definitions  Advertising can be defined as a paid medium of communication, through which an organization calls the attention of its current and potential customers towards its new or existing products and services in an attempt to convince them that the organizations offering will satisfy their very needs  According to Richard Buskirk, “Advertising is a paid form of non-personal presentation of ideas, goods or services by an identified sponsor.”  Advertising is the non-personal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through the various media."(Bovee, 1992, p. 7)
  17. 17. Importance of advertising  Create awareness -inform target audience about a product -focus on products ability to solve a common problem Example – Acne medication -pictures from before and after -specific target: people experiencing acne problem
  18. 18.  Product differentiation -Monopolistic competition concept whereby a product must enjoy a unique trait or group of traits, differentiating it from other product, thereby allowing it to claim its own monopolistic space -inform consumers about the benefits/effective Example -Automobile companies - specifics and price range when purchasing a car Advertising in this scenario -benefits, accessories, price and payment plan.
  19. 19.  Increase sales/stimulate demand -product desire = high demand = higher sales  Builds brand image -high quality products creates goodwill on the market -increase in consumers expectation Example; Apple Inc.
  20. 20. Strategies used in advertising Association  Link product with famous/popular people to create interest  Creates a strong psychological connection For example – Cosmetic products - Celebrities Nike – Athletes https://youtu.be/-R_483zeVF8
  21. 21. Claims  How would you define or know an effective product  Every consumer thinks about this when making a purchase  Organizations make assertions on products effectiveness  Common with substitute products  Also make exaggerations to stimulate demand – Lego commercials  Provides successful results by informing, educating, and developing expectations https://youtu.be/l5aF23XpBwU
  22. 22. Various means of advertising  Television -Used to reach a large number of people -Combination of audio and visual image -attracts attention especially during events -Effective in passing information
  23. 23. Product placement  Marketing strategy  Incorporate a branded product in a movie or TV show
  24. 24. Internet  Fastest growing media  Companies nowadays use Facebook, twitter, Instagram  Effective in catching the attention of consumers
  25. 25. Advantages of advertising  Product introduction -creates awareness  Provides information -qualities and benefits -simplifies the work of a salesman -eliminates the need for middlemen  Creates desire -increase in demand = higher production = increase in sales  Increase competitive advantage -continuous repetition keeps consumers apprised
  26. 26. Disadvantages of advertising  Cost -willingness to spend huge amount -adds to the cost of purchasing a product “in this reference it is said that advertising costs are passed on to the consumers in the form of high prices” (Pujari, 2011).  Mislead consumers -exaggerate about a products ability -not providing all information “believing in advertising, consumers buy the product. On its use, they feel cheated” (Pujari, 2011)
  27. 27.  Inappropriate content -Images not suitable for children For example -Viagra
  28. 28. Measuring advertisings effectiveness  Increase in demand -track sales before and after for increase  Customer enquiry -ask customers how they heard about your product  Measure web traffic -use of internet to advertise a product
  29. 29. Sales Promotion Definitions  Sales promotion is a form of marketing designed to be used as a temporary strategy to persuade consumers and intermediaries such as wholesalers or retailers to purchase a product in other to promote an increase in sales of a new or existing product  A sales promotion is a marketing technique that is designed to entice a customer to take specific action such as make a purchase or request information and it usually occurs for a limited period of time to help create a sense of urgency (Joseph, 2015).  According to Burnett John, “At its core, sale promotion is a marketing activity that adds to basic value proposition behind a product (i.e., getting more for less) for a limited time in order to stimulate consumer purchasing, selling effectiveness, or the effort of the sales force.”
  30. 30. Why firms use sales promotion  To attract new customers -offering incentives  Stimulating demand for a product  Improving the marketing performance of sales men -consumers are willing to listen  Clear out inventory -higher production lesser demand  Entice reluctant customers -Customers loyal to other company’s
  31. 31. Strategies used in sales promotion  Discount -product offered at a lowered price -used in product introduction -clear out product
  32. 32.  Product sampling -opportunity to try a product before making a purchase -eliminates doubt -often used in product introduction For example – test driving a car before making a purchase
  33. 33. Advantages of sales promotion  Encourage repeat purchase -gaining customer loyalty -gaining loyalty requires customer satisfaction For example - Sam’s club and membership card  Lure new customers -offering product with reduced price  Creates differentiation -Creates a reason to choose your product in a crowded market
  34. 34. Disadvantages of sale promotion  Short-term orientation -effective for a short period of time -helps sales for that same period  Damage product image -consumers perception on low price  Increase in price sensitivity -customers wait for promotion deals -affect profit margin
  35. 35. Measuring sales promotions effectiveness  Brand awareness -“Sometimes sales promotions are good public-relations vehicles, and can generate interest and return customers”.  Keep track of profit margin -The volume of additional sales must be large enough to generate profits greater than the cost of the sales promotion  Track sales to measure the effectiveness of a promotion once it is launched. -take note of numbers before and after promotion -assist in determining whether there as an increase in sales
  36. 36. Personal selling Definitions  It is a one-on-one promotion approach, in which the sales person builds a personal relationship in an attempt to persuade the customer to make a purchase  “Personal selling is a strategy that salespeople use to convince customers to purchase a product” Laura Jerpi  “Personal selling is the process of communicating with a potential buyer (or buyers) face-to-face with the purpose of selling a product or service”
  37. 37. Advantages of personal selling  Promote a company and its product -share personal experience with product  Two-way communication process -allows for immediate feedback -concerns and questions can be addressed  Build long-term relationship -customers satisfied with presentation and product
  38. 38. Disadvantages of personal selling  Inability to reach a large audience -Directed at limited customer -limited time period to create product awareness  High cost -amount spent on a sales person (training & maintaining)  Stake in consumer loyalty -Customer loyalty depends on the presence of the sales person -firm would be affected if the sales person moves out.
  39. 39. Strategies used in personal selling  After-sales service -additional assistance a seller provides -aimed at enhancing convenience and company image For example-home delivery, installation of items, or warranty service -maintenance service -shows confidence in product sold
  40. 40.  Maintaining contact -customer service (follow-up on a buyer) -keep customers apprised on latest development on product purchased  Relationship building -create trust -loyalty/repeat purchase
  41. 41. Methods of personal selling  Telemarketing -using the telephone as a primary means of communicating with prospective customers  Field selling -business to business selling that takes place at the prospective customers business place
  42. 42. Conclusion  Personal selling * persuade customers to make a quick purchase  Sales promotion * increase short-term sales  Advertising * create awareness of its product to a large audience  Public relation * build company image/reputation * build long-term relationship
  43. 43. References  http://www.knowthis.com/public-relations/advantages-of-public-relations  Australian Bureau of Statistics, (2015). About public relations. Retrieved from http://www.pria.com.au/aboutus/what-is-public-relations/  Ailoni-Charas, D. (1984). Promotion: A guide to effective promotional planning, strategies and executions. “A Ronald Press publication, ISSN 0275-875X.  Akrani, G. (2013). Importance of advertising – Why advertising is important? Retrieved from http://kalyan-city.blogspot.com/2013/01/importance-of-advertising-why.html  Boundless, (2015). The Purpose of Public Relations. Retrieved 12 Jan. 2016 from https://www.boundless.com/business/textbooks/boundless-business-textbook/marketing-communications-17/public- relations-105/the-purpose-of-public-relations-495-8086/  Brookins, M. (2014). What are the disadvantages of using public relations? Retrieved from http://smallbusiness.chron.com/disadvantages-using-public-relations-20498.html  Botan, C. (1992). International public relations: Critique and reformulation in public relations review, Vol. 18, No. 2, 1992: Pp 149-152.  Chartered Institute of Marketing, (2009) How to achieve an effective promotional mix. Retrieved from http://www.cim.co.uk/files/promotionalmix.pdf  Cohen, H. (2011) 31 public relations definition. Retrieved from http://heidicohen.com/public-relations-definition/  Currie, S. (2006). Word of mouth – the powerful public relations weapon. Retrieved from http://www.abn.org.au/business-resources/word-mouth-powerful-public-relations-weapon/  Dougherty, J. (2015). 9 word-of-mouth campaigns that rocked. Retrieved from http://www.cision.com/us/2015/03/9-word-of-mouth-campaigns-that-rocked/  Drypen, (2008). Disadvantages of sales promotion. Retrieved from http://www.drypen.in/sales-promotion/disadvantages-of-sales-promotion.html  Feira, Q. (2014). Advertising and consumers. Retrieved from http://advertisingandconsumers.blogspot.com/  Fisher, C. Advertising’s effects on demand. Retrieved from http://yourbusiness.azcentral.com/advertisings-effects-demand-11235.html  Ganguly, A. (2015). A constant debate on what is public relation. Retrieved from http://www.articlesbase.com/authors/anupama-ganguly/1734157  Gregory, L. (2015) Nike’s Promotion – Marketing Communication Mix. Retrieved on Jun 3, 2015 from http://panmore.com/nike-marketing-communications-mix  Halford, P. (2015). Marketing and PR. Retrieved from http://phoebehbmmjyeartwo.blogspot.com/2015_01_01_archive.html  Hamlett, C. (2013). Why is advertising so important to business? Retrieved from http://smallbusiness.chron.com/advertising-important-business-3606.html  Hudgins, C. (2014). 5 most common advertising techniques. Retrieved from http://smallbusiness.chron.com/5-common-advertising-techniques-15273.html  Johnston, G. (2015). The role of public relation in today’s climate. Retrieved from https://www.linkedin.com/pulse/20140915102630-216899627-the-role-of-public-relations-in-today-s- business-climate  Joseph, C. (2015). Consumer sales promotion techniques. Retrieved from http://smallbusiness.chron.com/consumer-sales-promotion-techniques-1035.html
  44. 44.  Joseph, C. (2015). Sales promotion advantages. Retrieved from http://smallbusiness.chron.com/sales-promotion-advantages-1059.html  Laura, J. (2014). Marketing strategies for personal selling. Retrieved from http://smallbusiness.chron.com/marketing-strategies-personal-selling-46563.html  Leigh, R. (2012). Great case study: McDonald’s crowdsourcing PR campaign delivers tasty financial results. Retrieved from http://prexamples.com/2012/05/great-case-study-mcdonalds-crowdsourcing-pr- campaign-delivers-tasty-financial-results/  Oltersdorf, J. (2009). Benefits of public relation. Retrieved from http://www.talentzoo.com/news/Benefits-of-Public-Relations/2627.html  Patil, R. (2013) Role of public relations in marketing. Retrieved from http://www.bms.co.in/role-of-public-relations-in-marketing/  Pilmer, J. (2005). Small business? Small Budget? How to measure for success, public relations tactics. Retrieved from http://www.prsa.org/intelligence/businesscase/measurementresources/measuringvalueofpublicrelations/#.VraEUtUrLIU  Pujari, S. (2011). 5 Important Disadvantages of Advertising. Retrieved from http://www.yourarticlelibrary.com/advertising/5-important-disadvantages-of-advertising/1110/  Sathya, D. & Bhagaban, D. (2010). Disadvantages of PR. Retrieved from https://books.google.com/books?isbn=8120337298  Suggett, P. (2011). Different types of advertising. Retrieved from http://advertising.about.com/od/advertisingprojects/a/Different-Types-Of-Advertising-Methods.htm  Tellis, G. (2003). Effective Advertising: Understanding when, how, and why advertising works. Retrieved from http://smallbusiness.chron.com/advertising-important-business-3606.html  Vaghela, M. (2015). Introduction, meaning and definition of sales promotion. Retrieved from http://smartlearningway.blogspot.com/2015/01/introduction-meaning-and-defination-of.html  Voteforus.com (2011). Starbucks success is its word of mouth/social media/viral marketing strategy. Retrieved from http://www.sosemarketing.com/2011/03/29/starbuck%E2%80%99s-success-is-its-word- of-mouthsocial-mediaviral-marketing-strategy/  Ward, S. (2015). Advertising: Advertising is defined by its purpose. Retrieved from http://sbinfocanada.about.com/cs/marketing/g/advertising.htm

Notas do Editor

  • Every tool has the same objective which involves motivating consumers to buy a product , but they all have different means of achieving that objective
    It is not just enough for an organization to place its product in the market, it has to create means through which cnsumers become aware of its product
    So lets say the objective of a company is to clear out its inventory, there are tools appropriate for such an objective and as we go further into this presentation,
  • For example, sometimes the message been passed across by organizations is not been understood by the targeted consumers which could lead to failure on the part of the organization to achieve its objective.
  • Organizations using public relations are not just looking to get consumers to buy their product one time, they are trying to establish a long term relationship with them, get them to keep coming back to buy their product
  • a company can use public relation to communicate to the public about its products characteristics as well as its benefits.
    In the case of special events, in depth information can be provided to customers about the product or service offering and in the case of public events, an organization can decide to sponsor an Olympic event or a charitable event, all with the aim of raising awareness of the new product.
  • An organization could experience a bad situation which it would wish to address using the media. In using the media, events could occur that would not allow the media to deliver the message an organization wanted to pass across to its consumers. This events would av to be more important than the message the organization is trying to convey to the public.
  • paid for . . . " is pretty straightforward. If an ad is created and placed in the media, the costs of creation and time or space in the media must be paid for. This is a major area in which advertising departs from public relations.
    http://public.wsu.edu/~taflinge/addefine.html
  • Informing the consumers about the price, quality, availability, direction and quantity of a product not only simplifies the work of a salesman but also eliminates the need for a middleman. After watching a commercial, consumers know where the product is made available for purchase.
  • Customers are more likely to listen to a sales rep talking about sales promotion than just the product itself.
  • Allows for a two way communication whereby the customer an share his thoughts or concerns and the sales person can provide feed back

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