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Management II Chapter 6ii.doc

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Chapter 6: Managing Marketing PROMOTING PRODUCTS AND SERVICES Promoting is any technique designed to sell a product. It is a part of the communication mix: the total message a company sends to consumer about its product. Promotional techniques must communicate the uses, features, and benefits of products. They also include various programs that add value beyond the benefits inherent in the product. • Information and Exchange Values: A business uses promotional methods to communicate info about itself and its products to consumers and industrial buyers. This is to influence purchase decisions and accomplish four things with potential customers: o Make them aware of products o Make them knowledgeable about products o Persuade them to like products o Persuade them purchase products o Successful promotions provide communication about the product and create exchanges that satisfy both the customer’s and the organization’s objectives. • Promotional Objectives: ultimate objective of any promotion is to increase sales. o Communicating Information: can advise customers about the availability of a product, educate them on the latest technological advances, or announce the candidacy of someone running for a government office. Information may be communicated in writing, verbally, or visually. An average consumer comes in contact with approximately 1500 bits of promotional communication per day. o Posting Products: product positioning is the establishment of an easily identifiable image of a product in the minds of consumers. With product positioning, the company is trying to appeal to a specific segment of the market rather than to the market as a whole. o Adding Value: today’s value-conscious customers gain benefits when the promotional mix is shifted so that it communicates value—added benefits in its products. o Controlling Sales Volume: increasing promotional activities during slow periods, firms can achieve more stable sales volume throughout the year. Thus, they can keep the production and distribution systems running evenly. • Promotional Strategies: After the objectives are made clear, the firm must develop strategies to achieve these objectives. Promotional strategies may be of the push or pull variety. A company with a push strategy will aggressively “push” its product through wholesalers and retailers, who persuade customers to buy it. A company with a pull strategy appeals directly to customers, who demand the product from retails, who demand it from the wholesalers. Advertisers pull while personal selling pushes. Makers of industrial products most often use a push strategy, and makers of consumer products most often use a pull strategy. • The Promotional Mix: promotional mix—the portion of marketing concerned with choosing the best combination of advertising, personal selling, sales promotions and publicity and public relations to sell a product. o The Target Audience: Promotion and the Buyer Decision Process 1. Buyers must first recognize the need to make a purchase. At this stage, marketers must make sure that buyers are aware of their products. Advertising and publicity, which can reach many people quickly, are important. 2. Buyers also want to learn more about available products. Advertising and personal selling are important because both can be used to educate consumers. 3. Buyers compare competing products. Personal selling can be vital. Sales representatives can demonstrate product quality and performance in comparison with competitors’ products. 4. Buyers choose products and purchase them. Sales promotion is effective b/c it can give consumers an incentive to buy. Personal selling can help by bringing products to convenient purchase locations. 5. Buyers evaluate products after purchase. Advertising, or even personal selling, is sometimes used to remind consumers that they made wise purchases. ADVERTISING PROMOTIONS Advertising—promotional tool consisting of paid, non-personal communication used by an identified sponsor to inform an audience about a product. Read example on Buckley’s. Advertising has its limits; it may convince customers to try a company’s product or service, but it is the customer’s experience with the product or service that determines whether they will make repeat purchases. • Advertising Strategies: During the informative stage, the informative advertising can help develop an awareness of the company and its product among buyers and can establish a primary demand for the product. During the growth stage, persuasive advertising can influence a large number of consumers to by the company’s products. During the maturity stage, comparative advertising influences the customer to switch from a competitor’s similar product to the firm’s product by directly comparing the two products. During the latter part of the maturity stage and all of the decline stage, reminder advertising keeps the product’s name in front of the consumer. • Advertising Media: advertisers use several different advertising media—the specific communication device (e.g. television and radio) used to carry a firm’s advertising message to potential customers. Read example on IBM. An advertiser selects media with a number of factors in mind. First they must ask: which medium will reach the people I want to reach? o Newspaper: a widely used advertising medium and offer excellent coverage, since each local market has at least one daily newspaper and many people read the paper every day. It offers flexible, rapid coverage and as well, believable coverage. However, newspapers are generally thrown out after one day, often do not print in colour, and have poor reproduction quality & do not allow advertisers to target their audience well. o Television: allow advertisers to combine sight, sound, and motion, thus appealing almost all of the viewer’s senses. Info on view demographics for a program allows advertisers to promote to their target audiences. One disadvantage of television is that too many commercials cause viewers to confuse products. The brevity of TV ads also makes television a poor medium to educate viewers about complex products. Television is the most expensive medium in which to advertise. o Direct mail: printed advertisements such as flyers, mailed directly to consumer’ homes or places of business. It allows the company to select its audience and personalize its message. It involves the largest advance costs of any advertising technique, but it appears to have the highest cost effectiveness. o Radio: a tremendous number of people listen to the radio and radio ads are inexpensive. Since most radio is programmed locally, it gives advertisers a high degree of customer selectivity. However, radio ads are short and only permit audio presentation. People tend to use the radio as a “background” while doing other things, losing attention. o Magazines: have a high level of consumer selectivity. They allow for excellent reproduction of photographs and artwork that grab the buyer’s attention and also convince them of the product’s value. Magazines allow advertisers plenty of space for detailed product information. Magazines have a long life and tend to be passed from person to person and increasing the number of exposures. o Outdoor Advertising: billboards, signs, and advertisements on buses, taxis, and subways is relatively inexpensive, faces little competition for customers’ attention, and is subject to high repeat exposure. Many billboards now feature animation and changing images, and today’s billboard messages are cheaper b/c the can be digitally printed in color in large quantities. On the downside, outdoor ads can present only limited info and sellers have little control over who sees their advertisements. o Word of Mouth: (a.k.a buzz marketing) is opinions about the value of products passed among consumers in informal discussions. o Internet: ecommerce –buying and selling processes that make use of electronic technology. Internet marketing is the promotional efforts of companies to sell their products and services to consumers over the internet.  Internet advertising offers advantages for both buyers and sellers. For buyers, advantages are: convenience, privacy, selection, useful info, and control.  For sellers, advantages are: reach, direct distribution, reduced expenses, relationship building, flexibility, and feedback.  However problems will arise for both parties. For example, profitability problems (high failure rate), information overload, limited markets.  In addition to those flaws, internet marketers must also deal with two security-related issues: security (privacy and iden
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