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Chapter 7

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York University
Administrative Studies
ADMS 3920

3 October 2012 CHAPTER 7: PROMOTIONAL AND PRICING STRATEGIES Promotion consists of marketing communications that inform consumers about a firm‟s product and persuade them to use it. THE COMMUNICATION PROCESS IN PROMOTION The challenge of effective communication is twofold: (1) to create the promotions that will be most effective in creating awareness and motivation to buy in the target market, and (2) creating a cost-effective promotion program. A promotional mix involves a combination of the various promotional methods – personal selling, advertising, and using promotional tools. The composition is determined by four major factors:  Geographical Nature  Target Market  Product‟s Characteristics  Budget ADVERTISING PRACTICES FOR SMALL FIRMS Advertising – the impersonal presentation of a business idea through mass media. All advertising starts with a set of objectives:  Seeks to sell by informing, persuading, and reminding customers of the existence or superiority of a firm‟s product or service.  To be successful, advertising must rest on a foundation of product quality and efficient service. The two basic types of advertising are: 1. Product advertising – is designed to make potential customers aware of a particular product or service and their need for it. 2. Institutional advertising –conveys information about the business itself. It is intended to keep the public conscious of the company and enhance its image. 5 forms of media: 1. Traditional Paid includes: television, radio, newspaper, magazine, Web banner advertisements, and so on. The advertiser pays for the space and controls the message it is sending out to customers. 2. With owned media, the company uses its own channels to advertise through catalogues, websites, email broadcasts, Facebook pages, and its own retail stores. 3. Earned media is where consumers create or share the company‟s media. E.g. keyword searches on search engines, forwarding popular commercials or posting them to YouTube, consumer ratings and reviews, and rankings on community sites. 3 October 2012 4. Sold media involves inviting other marketers to place content on a company‟s owned media. E.g. E-commerce website that sells advertising space on its site, and a consumer marketer creating an online community of users and offering advertising space for sale to its members. 5. Hijacked media is a relatively new phenomenon where a company‟s advertising campaign is “taken hostage” by consumers who oppose it. E.g. This can be done using Facebook and Twitter to rally opposition and even making parodies of the company‟s advertisements and distributing them through social media or posting them on You Tube. Frequency: Determining how often to advertise is an important and highly complex issue for a small business. Advertising should be done regularly, but seasonal advertising may be justified, such as advertising of a new product or a Boxing Day sale. Message: Most small business rely on advertising agencies, suppliers, trade associations, and advertising media to create their promotional messages. These agencies can provide the following:  Furnish design, artwork, and copy for specific advertisements/commercials  Evaluate and recommend the advertising media with the greatest “pulling power”  Evaluate the soundness of different advertising appeals  Advise on sales promotions and merchandise displays  Conduct marketing sampling studies to evaluate product acceptance or determine the sales potential of a specific geographic area  Province mailing lists Traditional Advertising Media: Most small firms restrict their advertising, either geographically or by customer type. Advertising must reach a firm‟s present or desired target market. E.g. Wraps on company cars, commercials on television or radio station. Online Advertising: Allows advertisers to reach large numbers of global buyers in a timely manner, at less expensive, and with more impact than many alternatives. E.g. Banner ads and pop-ups, direct email promotion, sponsorships and linkages, a corporate website, and the use of social media sites such as Facebook, Twitter, and You Tube.  Banner ads are advertisements that appear across a web page, most often as moving rectangular strips. In contrast, pop-up ads burst open on web pages but do not move.  Direct email promotion, in which electronic mail is used to deliver a firm‟s message, provides a low-cost way to pinpoint customers and achieve response rates higher than those for banner ads.  In Web sponsorship, a firm pays to be part of another organization‟s web page. Linkage is a type of advertising agreement in which one firm pays another to include a click-on link on its site.  Corporate website involves three critical steps: (1) creating and registering a site name, (2) building a user-friendly site, and (3) promoting the site. ONLINE MARKETING STRATEGIES 3 October 2012 1. Paid Keyword Ads (pay-per-click): advertisers can pay search engine providers to have their ad come up on the right or top of the natural list of sites in response to keyword searches. 2. Natural Rankings (SEO): is a method of having a company‟s website come up on the first page of a search-engine search. 3. Online Newsletters: emails with current promotions in the company. 4. Online Press Releases: Used to announce significant events such as launching a new product, opening a new location, or making a donation or some other philanthropic activity. 5. Social Media Marketing: Facebook, You Tube, and Twitter. SALES PROMOTION FOR SMALL FIRMS Sales promotion – an inclusive term for any promotional techniques that are neither personal selling nor advertising. 1. Specialties: anything that has imprinted the firm‟s name or other identifying slogan on it such as a calendar, coffee mug, pen, mouse pads, and ball caps. Specialties are enduring and personal in nature and have tangible value. 2. Trade Show Exhibits: allow potential customers to get hands-on experience with a product. Trade shows are less expensive than personal selling, and could be a cost- effective way of reaching a large number of consumers.  Plan ahead  Create a presence on the show floor – hire celebrities, run exciting games, or offer samples or a prize to stand out is a must.  Create moving billboards such as ad on a bus, or giveaway of backpacks with the company‟s name on them  Make the booth interactive – games, contests, tests of skill, trivia challenges, and other interactive activities are
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