9 Promotional Strategy McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved

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Promotional StrategyPromotional Strategy

McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

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AgendaAgenda

The Role of Promotion in Business MarketingThe Role of Promotion in Business Marketing Setting Objectives for a Promotional PlanSetting Objectives for a Promotional Plan Developing the Promotional BudgetDeveloping the Promotional Budget Developing and Implementing the Promotional Developing and Implementing the Promotional

MixMix Measuring the Effectiveness of the Business Measuring the Effectiveness of the Business

Promotion CampaignPromotion Campaign Following Up and Making Necessary ChangesFollowing Up and Making Necessary Changes

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Marketing Mix = Product, Price, Promotion, Place (Distribution)

Business promotion = the use of seller-generated promotional tools to deliver messages to business markets.

Promotion MixProfessional selling

Advertising

Public relations

Sales promotion

Direct marketing

The Role of Promotion The Role of Promotion in Business Marketingin Business Marketing

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Integrated marketing communications (IMC) – the coordination of the promotional mix elements along with other marketing activities such that all communication with the firm’s customers is consistent

Promotional campaign – a sequence of promotions reflecting a common theme and geared to specific objectives.

The Role of Promotion in B2B MarketingThe Role of Promotion in B2B Marketing

Advertising, publicity (PR), sales promotion and direct marketing are communication methods used by marketers to inform, remind or persuade current and potential customers… In the business market, advertising, publicity, sales promotion and direct marketing pave the way for the sales call (professional selling).

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Steps in a Promotional CampaignSteps in a Promotional Campaign

1.1. Setting objectivesSetting objectives

2.2. Developing a budgetDeveloping a budget

3.3. Developing and implementing the Developing and implementing the promotional mixpromotional mix

4.4. Measuring the effectiveness of the Measuring the effectiveness of the campaigncampaign

5.5. Following up and modifying the Following up and modifying the campaigncampaign

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Step 1: Setting Objectives for a Step 1: Setting Objectives for a Promotional PlanPromotional Plan

Communication objectives Communication objectives • Building product awarenessBuilding product awareness• Inducing trial and/or retrial of new productsInducing trial and/or retrial of new products• Countering competitors’ offeringsCountering competitors’ offerings• Building product-line acceptanceBuilding product-line acceptance• Obtaining space with distributorsObtaining space with distributors• Intensifying usageIntensifying usage• Aiding the sales staffAiding the sales staff• Reviving a brandReviving a brand• Confirming buyers’ purchase decisionsConfirming buyers’ purchase decisions

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Setting Objectives for a Setting Objectives for a Promotional PlanPromotional Plan

Sales objectives Sales objectives • Increasing market shareIncreasing market share• Stimulating short-term salesStimulating short-term sales• Sustaining product preferenceSustaining product preference

Effective promotion helps sales; ineffective promotion can waste money and even damage company image.

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Step 2: Developing the Promotional Step 2: Developing the Promotional BudgetBudget

Percentage of anticipated salesPercentage of anticipated sales Affordable/Arbitrary (very common)Affordable/Arbitrary (very common) Competitive parity/Market shareCompetitive parity/Market share Objective-and-task (very common)Objective-and-task (very common)

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Step 3: Developing and Implementing Step 3: Developing and Implementing the Promotional Mixthe Promotional Mix

Business AdvertisingBusiness Advertising• Goals of Business AdvertisingGoals of Business Advertising

To make current or potential customers To make current or potential customers aware of the marketer’s firm.aware of the marketer’s firm.

To convey information about the To convey information about the characteristics of a particular product or characteristics of a particular product or service offered by the marketer’s firm.service offered by the marketer’s firm.

To ease the salesperson’s job.To ease the salesperson’s job. To reduce overall selling costs.To reduce overall selling costs.

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/e-mail /e-mail

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Media Selection (media mix)Media Selection (media mix)Print MediaPrint Media

Horizontal publications, Horizontal publications, e.g., e.g., Design Design Engineering, PurchasingEngineering, Purchasing

Vertical publications, Vertical publications, e.g., e.g., Chemical Chemical Industry News, Mechanical ContractorIndustry News, Mechanical Contractor

Professional publications,Professional publications, e.g., e.g., Architectural Digest, Dental TechnologyArchitectural Digest, Dental Technology

Industrial trade directories,Industrial trade directories, e.g., e.g., Thomas Register of American Thomas Register of American ManufacturersManufacturers

General business publications,General business publications, e.g., e.g., Fortune, Business WeekFortune, Business Week

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Media Selection (media mix)Media Selection (media mix)

Broadcast MediaBroadcast Media Radio and TV are sometimes used where market is Radio and TV are sometimes used where market is

highly geographically concentrated and product is of highly geographically concentrated and product is of interest to broad range of business users.interest to broad range of business users.• A roller bearing company in Ohio may use radio ads during A roller bearing company in Ohio may use radio ads during

morning commute in highly industrialized city to reach buying morning commute in highly industrialized city to reach buying center influencers in local industries where roller bearings are center influencers in local industries where roller bearings are used.used.

• IBM, Hewlett-Packard, Xerox, or FedEx may use TV spot during IBM, Hewlett-Packard, Xerox, or FedEx may use TV spot during “Dilbert,” which is watched by professionals from a wide range of “Dilbert,” which is watched by professionals from a wide range of industries, i.e., potential customers.industries, i.e., potential customers.

Broadcast media would not be likely vehicle if products Broadcast media would not be likely vehicle if products were only used by a few companies in target area (which were only used by a few companies in target area (which is often the case).is often the case).

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Business Advertising ContentBusiness Advertising Content

A good ad often is similar to a sales callA good ad often is similar to a sales call• Opener (headline) to catch interestOpener (headline) to catch interest• Body to convey information and benefitsBody to convey information and benefits• Call for action to closeCall for action to close

Ad’s connection to customer’s buying and adoption Ad’s connection to customer’s buying and adoption process should be clear.process should be clear.

A good ad:A good ad:• Is memorableIs memorable• Is consistent with company’s imageIs consistent with company’s image• Interests the right target audienceInterests the right target audience• Is easy to readIs easy to read• Provides evidence of customer valueProvides evidence of customer value• Motivates reader to want to learn moreMotivates reader to want to learn more

• Provides easy way for reader to learn moreProvides easy way for reader to learn more

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Advertising AgenciesAdvertising Agencies

Advertising agencies Advertising agencies work on advertising work on advertising strategy and campaigns, prepare copy and strategy and campaigns, prepare copy and layouts, study markets, select media, and carry layouts, study markets, select media, and carry out actual physical production of advertisement out actual physical production of advertisement and its placement in selected media. and its placement in selected media.

AgenciesAgencies do not alwaysdo not always understand technology understand technology and particular buying process in business and particular buying process in business markets. Even when using advertising markets. Even when using advertising professionals, marketer must assure ad strategy professionals, marketer must assure ad strategy and content is appropriate and effective. How and content is appropriate and effective. How can you do that?can you do that?

(continued)

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When using an agency, marketer is responsible When using an agency, marketer is responsible for:for:

• Creating and measuring ad and campaign objectives.Creating and measuring ad and campaign objectives.

• Understanding target market’s adoption process.Understanding target market’s adoption process.

• Understanding how ad campaign fits into integrated Understanding how ad campaign fits into integrated promotion mix that moves potential buyer through each promotion mix that moves potential buyer through each step in adoption process and supports continued step in adoption process and supports continued customer satisfaction and repurchase.customer satisfaction and repurchase.

• Testing ads.Testing ads.

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Many business marketers don’t formally test advertising Many business marketers don’t formally test advertising effectiveness (as strange as that may seem!).effectiveness (as strange as that may seem!).

Agencies are paid for their ad production costs, plus a Agencies are paid for their ad production costs, plus a percentage (~15%) of every media placement. If a percentage (~15%) of every media placement. If a marketer relies on the agency to recommend marketer relies on the agency to recommend placements, there may be a conflict of interest.placements, there may be a conflict of interest.

Some marketers are asking agencies to accept payment Some marketers are asking agencies to accept payment based on ad and campaign performance (pre- and based on ad and campaign performance (pre- and posttesting). Agencies are resisting.posttesting). Agencies are resisting.

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Developing and Implementing the Developing and Implementing the Promotional MixPromotional Mix

Business PublicityBusiness Publicity• Publicity can:Publicity can:

Help build or add to company’s visibility or image.Help build or add to company’s visibility or image. Introduce a new product, service, or improvement.Introduce a new product, service, or improvement. Provide salespeople with easier entry into office of Provide salespeople with easier entry into office of

current or prospective customers.current or prospective customers. Can also be negativeCan also be negative

(continued)

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Business PublicityBusiness Publicity

• Good publicity doesn’t just happen; it is managed. PR Good publicity doesn’t just happen; it is managed. PR department will create relationships with appropriate department will create relationships with appropriate media representatives and provide them with media representatives and provide them with newsworthy information presented from the newsworthy information presented from the company’s perspective. If all goes well, that is how it company’s perspective. If all goes well, that is how it will appear.will appear.

• Because media are not paid to present publicity, there Because media are not paid to present publicity, there is little control over how it is presented. Marketers is little control over how it is presented. Marketers tend to have more influence with media outlets they tend to have more influence with media outlets they regularly use to advertise.regularly use to advertise.

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Business PublicityBusiness Publicity• Techniques for getting in the news:Techniques for getting in the news:

Press releasesPress releases Exclusive featuresExclusive features Press conferencesPress conferences Press kitsPress kits

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Business Publicity (Example)Business Publicity (Example)

In a recent example of the lack of control over publicity, a In a recent example of the lack of control over publicity, a university put out a news release concerning the student university put out a news release concerning the student government’s new honor code. Acting on their own, the government’s new honor code. Acting on their own, the students created a set of honor standards and administration students created a set of honor standards and administration plan that are among the most rigorous in the nation. As a plan that are among the most rigorous in the nation. As a final step in the process, the faculty voted their support of the final step in the process, the faculty voted their support of the code. code.

The news item was picked up by the region’s leading paper The news item was picked up by the region’s leading paper which ran the story under the bold headline:which ran the story under the bold headline:

University Faculty Approves Cheating PlanUniversity Faculty Approves Cheating Plan

At best, the headline is poorly worded.At best, the headline is poorly worded.

(continued)

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Business Publicity (Example)Business Publicity (Example)

Roger E. Axtell, a past Vice President of Marketing for the Parker Pen Roger E. Axtell, a past Vice President of Marketing for the Parker Pen Company tells of one his first assignments with the company. He sent Company tells of one his first assignments with the company. He sent out a news release announcing a new company president and out a news release announcing a new company president and management team. The newspaper ran the item with the new management team. The newspaper ran the item with the new management team’s pictures by the side of the article. Unfortunately, management team’s pictures by the side of the article. Unfortunately, directly under the pictures the newspaper had placed an unrelated directly under the pictures the newspaper had placed an unrelated article with the headline: article with the headline:

Local Men Arrested in Pig TheftLocal Men Arrested in Pig Theft

Getting free publicity is nice, but it leaves you at mercy Getting free publicity is nice, but it leaves you at mercy of poor placements, poor wording, or intentional of poor placements, poor wording, or intentional negative spin. Use it with caution and try to build long-negative spin. Use it with caution and try to build long-term relationships.term relationships.

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Business Sales Promotion - Business Sales Promotion - Trade Shows Trade Shows and Exhibitsand Exhibits• Deciding Whether to ParticipateDeciding Whether to Participate• Trade Show BudgetingTrade Show Budgeting• Contests, Sweepstakes, and GamesContests, Sweepstakes, and Games• Advertising SpecialtiesAdvertising Specialties

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Trade Shows and ExhibitsTrade Shows and Exhibits

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Trade Shows and ExhibitsTrade Shows and Exhibits

Trade shows are often large component of total Trade shows are often large component of total business marketing promotion budget allocation business marketing promotion budget allocation (behind personal selling and, possibly, trade (behind personal selling and, possibly, trade journal advertising).journal advertising).

Trade shows (large and small, industry-specific Trade shows (large and small, industry-specific and general) are regularly scheduled in cities all and general) are regularly scheduled in cities all across the world.across the world.

COMDEX, the U.S. computer industry trade COMDEX, the U.S. computer industry trade show, brings together 2,200+ companies and show, brings together 2,200+ companies and 220,000 attendees.220,000 attendees.

(continued)

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Trade Shows and ExhibitsTrade Shows and Exhibits Like all marketing expenditures, trade shows need to have Like all marketing expenditures, trade shows need to have

measurable objectives and a budget.measurable objectives and a budget. Expenses include:Expenses include:

• Space rentalSpace rental• HotelHotel• Display boothDisplay booth• Shipping (2-way)Shipping (2-way)• Set-up/dismantleSet-up/dismantle

(union rate)(union rate)• VCR/PC/internet/phoneVCR/PC/internet/phone• TravelTravel• MealsMeals• EntertainmentEntertainment• Give-aways/Catalogs/Brochures to pass out to attendeesGive-aways/Catalogs/Brochures to pass out to attendees• Chairs, tables, carpet rentalChairs, tables, carpet rental• Pre-show promotion/advertisingPre-show promotion/advertising• Post-show follow-upPost-show follow-up

(continued)

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Sales PromotionSales Promotion Advertising specialty items:Advertising specialty items:

• CalendarsCalendars• PensPens• PostersPosters• Tape measuresTape measures• MugsMugs

If company name is on item that is handy to If company name is on item that is handy to buying center influencers, is it effective as buying center influencers, is it effective as goodwill or as a reminder?goodwill or as a reminder?

• Desk clocksDesk clocks• Calculator notepadsCalculator notepads• Desktop business card Desktop business card holdersholders

• Travel alarm clocksTravel alarm clocks

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Winning Sales through Winning Sales through Cooperative PromotionCooperative Promotion

At Montana State University, Pepsi is out and Coke is in. In a At Montana State University, Pepsi is out and Coke is in. In a competitive bid, Coca-Cola has won the five-year contract to be the competitive bid, Coca-Cola has won the five-year contract to be the exclusive soft drink supplier for the entire MSU campus. To win the exclusive soft drink supplier for the entire MSU campus. To win the contract, Coke offered the school a combination of cash payments contract, Coke offered the school a combination of cash payments and value through cooperative promotion.and value through cooperative promotion.

These promotions included:These promotions included:

• $250,000/year payments plus a commission on sales$250,000/year payments plus a commission on sales

• Cooperative marketing program including radio advertisingCooperative marketing program including radio advertising

• New soccer field scoreboard and ice machineNew soccer field scoreboard and ice machine

• Coke cans across the region to carry MSU logoCoke cans across the region to carry MSU logo

• Off-campus vending machines with MSU logo, plus Off-campus vending machines with MSU logo, plus commission on those salescommission on those sales

• (From (From Marketing News,Marketing News, November 8, 1999, p. 9.) November 8, 1999, p. 9.)

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Business Direct and Interactive MarketingBusiness Direct and Interactive Marketing• Business-to-business direct marketing is big Business-to-business direct marketing is big

business—approximately $1 trillion/year.business—approximately $1 trillion/year.• TypesTypes

Direct mailDirect mail TelemarketingTelemarketing e-mail/Internete-mail/Internet

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Step 4: Measuring the Effectiveness of the Step 4: Measuring the Effectiveness of the Business Promotion CampaignBusiness Promotion Campaign

Pretesting and PosttestingPretesting and Posttesting Responses to Business AdvertisingResponses to Business Advertising

Effectiveness can be hard to measure Effectiveness can be hard to measure without investment in market researchwithout investment in market research

And how do you measure branding?And how do you measure branding?

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Step 5: Following up and Making Step 5: Following up and Making Necessary ChangesNecessary Changes

Set good objectivesSet good objectives• QuantifiableQuantifiable• Specify target marketSpecify target market• Realistic/attainableRealistic/attainable• Specify time frameSpecify time frame

Put measurement tools in placePut measurement tools in place Provide quick feedback loop to relevant Provide quick feedback loop to relevant

partiesparties

This is otherwise known as the “control” process.

Documents

9 Promotional Strategy McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved