Lecture Basic Marketing: A global-managerial approach: Chapter 14 - William D. Perreault, E. Jerome McCarthy

Chapter 14:
  

Promotion —
Introduction to
Integrated Marketing
Communications

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Chapter 14 Objectives
When you finish this chapter, you should
1.  Know the advantages and 
  6.  Understand how new customer­
disadvantages of the promotion 
initiated interactive communication 
methods a marketing manager can 
is different.
use in strategy planning.
  7.  Know how typical promotion plans 
2.  Understand the integrated marketing 
are blended to get an extra push 
communications concept and why 
from middlemen and help from 
most firms use a blend of different 
customers in pulling products 
promotion methods.
through the channel.

3.  Understand the importance of 
  8.  Understand how promotion blends 
promotion objectives. 
typically vary over the adoption 
curve and product life cycle.
4. Know how the communication 
process affects promotion planning.   9.  Understand how to determine how 
much to spend on promotion 
5.  Understand how direct­response 
efforts.
promotion is helping marketers 
develop more targeted promotion  10.  Understand the important new 
blends.
terms.
14­2

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Basic Promotion Methods
Target
Market

Product

Place

Personal

Selling

Promotion

Mass
Selling

Advertising

Price

Sales
Promotion

Publicity

Exhibit 14­1
14­3

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Sales Promotion Activities
Aimed at final
consumers or users
Contests
Coupons
Aisle displays

Samples
Trade shows
Point­of­purchase
  materials
Banners and 
  streamers
Trading stamps
Sponsored events

Exhibit 14­2
14­4

Aimed at middlemen
Price deals
Promotion allowances
Sales contests
Calendars
Gifts
Trade Shows
Meetings
Catalogs
Merchandising aids

Aimed at company’s
own sales force
Contests
Bonuses
Meetings
Portfolios
Displays

Sales aids
Training materials

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Promotion and the Demand Curve

Price

 

D1

D2

0

Quantity

Promotion efforts may be 
targeted to make demand 
for the firm’s products 
more inelastic and so 
more resistant to 
counter­moves by the 
competition.

A. To be more inelastic
Exhibit 14­3A
14­5

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Promotion and the Demand Curve

Price

D
D

0

Quantity

Promotion efforts 
may be targeted to 
increase the  demand 
for the firm’s 
products.

B. to the right
Exhibit 14­3B
14­6

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Promotion and the Demand Curve

Price

D
D

0

Quantity

Promotion efforts may 
be targeted to both 
increase  demand for 
the firm’s products and 
to make demand more  
inelastic

C. Both to the right and
more inelastic
Exhibit 14­3C
14­7

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999

Irwin/McGraw-Hill


Promotion and the Demand Curve

Price

Price

Price

D1

D

D2

0

14­8

D

D

Quantity

A. To be more elastic
Exhibit 14­3

D

0

Quantity

B. to the right

0

Quantity

C. Both to the right
and more elastic
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Promotion and the AIDA Model

Promotion Objectives
Informing
Persuading
Reminding

Adoption Process

AIDA Model

Awareness
Interest
Evaluation
Trial
Decision
Confirmation

Attention
Interest

{

}

Desire

}

Action

Exhibit 14­4
14­9

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


The Traditional Communication Model

Source

Encoding

Message
channel

Decoding

Receiver

Noise

Feedback

Exhibit 14­5
14­10

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Message Interpretation

Encoder
The same 
message may be 
interpreted 
differently by the 

encoder and the 
decoder

Common
frame of
reference

Decoder

Exhibit 14­6
14­11

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Customer-Initiated Interactive Communication
Receiver
(Customer)

Source’s
Message

Noise

Select a
topic

Search

Message
channel

Exhibit 14­7
14­12

For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Push-Pull Strategies
Producer’s Promotion Blend

Exhibit 14­8
14­13

Wholesaler
Promotion
Push

Promotion to
Channel Members

Wholesaler
Promotion
Push

Retailer

Promotion
Push

Business
Customer
Pull

Promotion to
Final Customers

Promotion to
Business Customers

Personal Selling, Sales Promotion, Advertising, Publicity

Final
Consumer
Pull
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


The Adoption Curve
Innovators
(3-5%)

Percent Adoption

90

Early
Adopters
(10-15%)

Early
Majority
(34%)

Late
Majority
(34%)

Laggards/
Nonadopters
(5-16%)

50

20

5
0

Exhibit 14­9
14­14

Time

For use only with Perreault and McCarthy texts.

© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Setting the Promotion Budget

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14­15

Percentage
Percentage of
of Sales
Sales
Match
Match Competitors
Competitors
Per
Per Unit
Unit
Uncommitted
Uncommitted Resources
Resources
Task
Task Method
Method
For use only with Perreault and McCarthy texts.

© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill


Key Terms
Promotion
Personal Selling
Mass Selling
Advertising
Publicity
Sales Promotion
Sales Managers
Advertising Managers
Public Relations
Sales Promotion
Managers
Integrated Marketing
Communications
AIDA Model
Communication
Process
Source
14­16

Receiver
Noise
Encoding
Decoding
Message Channel
Pushing 

Pulling
Adoption Curve
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
   Nonadopters
Primary Demand
Selective Demand
Task Method
For use only with Perreault and McCarthy texts.
© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill